1

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-65935 September 30, 1988
FLN!EST CRE"T CORPOR#TON, petitioner,
vs.
T$E NTERME"#TE #PPELL#TE COURT %&' NESTOR (. SU)G#
*R., respondents.
Labaguis, Loyola, Angara Law Offices for petitioner.
Juan C. Navarro, Jr. for private respondent.
S#RMENTO, J.:
In this special civil action for certiorari, ilinvest Credit Corporation i!plores us to
declare the nullit" of the Decision
1
dated Septe!ber #$, %&'# and the
Resolution
+
dated Dece!ber %(, %&'# of the Inter!ediate )ppellate Courts
3
*no+
Court of )ppeals, +hich +ere alle-edl" issued +ith -rave abuse of discretion,
a!ountin- to lac. of /urisdiction, or in e0cess of /urisdiction, and +ith patent denial of
due process.
,
1he facts as found b" the trial court are as follo+s2
5
1his is a case for da!a-es filed b" Nestor 3. Sun-a 4r., business!an and o+ner of the
N3S Machineries Mar.etin- and the N)P5N)P 1ransit. Plaintiff alle-ed that he
purchased a passen-er !inibus Ma6da fro! the Motor center, Inc. at Calasiao,
Pan-asinan on March 7%, %&8' and for +hich he e0ecuted a pro!issor" note *E0hibit
939, to cover the a!ount of P(7,:&7.$$ pa"able !onthl" in the a!ount of P7,($'.$$ for
7; !onths due and pa"able the %st da" of each !onth startin- Ma" %, %&8' thru and
inclusive of Ma" %, %&'$. On the sa!e date, ho+ever, a chattel !ort-a-e +as e0ecuted
b" hi! in favor of the Motor center, Inc. *E0hibit 9)9,. 1he Chattel Mort-a-e and
)ssi-n!ent +as assi-ned to the ilinvest Credit Corporation +ith the confor!it" of the
plaintiff. Nestor Sun-a clai!ed that on October 7%, %&8', the !inibus +as sei6ed b" t+o
*7, e!plo"ees of the defendant ilinvest Credit Corporation upon orders of the branch
!ana-er Mr. <aspar de los Santos, +ithout an" receipt, +ho clai!ed that he +as
delin=uent in the pa"!ents of his vehicle. 1he plaintiff reported the loss to the PC
*E0hibit 9>9, and after proper verification fro! the office of the ilinvest, the said vehicle
+as recovered fro! the Crisolo-o Co!pound +hich +as later released b" Rosario
ronda )ssistant Mana-er of the ilinvest, and )rturo 3alatbat as careta.er of the
co!pound. 1he police blotter of the Inte-rated National Police of Da-upan Cit" sho+s
that Nestor Sun-a and 1?S-t. Isidro Pascual of the %:#rd PC Co!pan" sou-ht the
assistance of the Da-upan police and one lorence Onia of the ilinvest e0plained that
the !inibus +as confiscated because the balance +as alread" past due. )fter
verification that his accounts are all in order, lorence Onia ad!itted it +as their fault.
1he !otor vehicle +as returned to the plaintiff upon proper receipt.
)fter trial, the court a quo rendered its decision
6
the decretal portion of +hich reads2
@AEREORE, pre!ises considered, this Court hereb" renders /ud-!ent as follo+s, to
+it2
*%, ORDERIN< the defendant ilinvest Credit Corporation to pa" the plaintiff Nestor
Sun-a 4r. the follo+in- da!a-es, to +it2
*a, Moral Da!a-es P#$,$$$.$$
*b, Boss on Inco!e of the !inibus for three da"s ($$.$$
*c, )ctual da!a-es :$$.$$
*d, Biti-ation e0penses :,$$$.$$
*e, )ttorne"Cs ees %$,$$$.$$
*7, )nd to pa" the costs.
SO ORDERED.
Dissatisfied +ith the aforecited decision, the defendant *petitioner herein,, interposed a
ti!el" appeal +ith the respondent court. On Septe!ber #$, %&'#, the latter pro!ul-ated
its decision affir!in- in toto the decision of the trial court dated 4ul" %8, %&'%, 9e0cept
+ith re-ard to the !oral da!a-es +hich, under the circu!stances of the accountin-
error incurred b" ilinvest, is hereb" increased fro! P#$,$$$.$$ to P:$,$$$.$$.9
-
)s the
reconsideration of said decision proved futile in vie+ of its denial b" the respondent
court in its resolution of Dece!ber %(, %&'#, the petitioners co!e to us thru this instant
petition for certiorari under Rule (: of the Rules of Court.
1he petitioner alle-es the follo+in- errors2
8
It is a patent -rave abuse of discretion a!ountin- to lac. of /urisdiction and a bare denial
of petitionerCs constitutional ri-ht to due process of la+, +hen the respondent Court
co!pletel" i-nored the assi-ned errors in the petitionerCs 3rief upon +hich private
respondent had /oined issues +ith petitioner.
In resolvin- the appeal before it thru !atters and =uestions not raised at the trial or on
appeal, b" either of the parties, respondent Court e0ceeded its /urisdiction and acted
+ith -rave abuse of discretion.
2
@hen the respondent Court -ranted private respondent MOR)B D)M)<ES in an
e0a--erated and unconscionable a!ount, respondent Court e0ceeded the bounds of its
discretion, a!ountin- to an absence or lac. of /urisdiction.
Respondent Court had NO authorit" to increase the a+ard of D)M)<ES to private
respondent +hen the latter did not appeal the decision because private respondent
considered the /ud-!ent *=uestioned b" petitioner on appeal, as 9perfect9, 9sound9 and
9+ise9 *at pp. %8 to 7$, 3rief for )ppellee,.
In rel"in- upon a 3IBB pendin- before the 3atasan Pa!bansa to buttress its /ud-!ent,
the respondent Court acted contrar" to la+ and /urisprudence, !a.in- of its /ud-!ent a
NDBBI1>.
1he e0tensive citation and adherence b" the respondent Court on *sic, its decision in the
case of 9Edilberto Rebosura, et al. versus Ro-aciano Orope6a, C)5<.R. No. (#$;'5R,
Dece!ber %8, %&'#9 *+hich is non5doctrinal and under =uestion in the Aonorable
Supre!e Court, is not +arranted in la+ and /urisprudence, and a!ounts to a -rave
abuse of discretion.
1he various assi-n!ents of error !a" be s"nthesi6ed into the sole issues
9
of. @hether
or not the respondent court a, in alle-edl" i-norin- the various assi-ned errors in
petitioners briefE b, in resolvin- issues not raised at the trial and on appealE c, in
increasin- the a!ount of !oral da!a-esE and *d, in adherin- to its decision in Edilberto
Rebosura et al. vs. Ro-aciano Orope6a, C)5<.R. No. (#$;'5R, as +ell as to 3atasan
3ill No. #$8:, +hich is "et to be enacted into la+, acted +ith -rave abuse of discretion
a!ountin- to lac. of /urisdiction.
Contrar" vie+s are espoused b" the parties in this case. Petitioner !aintains that it +as
patent -rave abuse of discretion a!ountin- to lac. of /urisdiction and a bare denial of
the petitionerCs constitutional ri-ht to due process of la+, +hen the respondent court
co!pletel" brushed aside the assi-ned errors in its brief.
10
It asserts that the
constitutionalit" of the contractual stipulation bet+een the parties e!bodied in the
docu!ents deno!inated as Pro!issor" Note and Deed of Mort-a-e +as not in issue in
the court a quo and neither +as the sa!e raised on appea
11
and therefore should not
have been passed upon based on the pre!ise that the appellate court should not
consider an" error other than those assi-ned or specified.
1+
urther, it sub!its that the
controvers" on appeal is capable of ad/udication on other substantive -rounds, +ithout
necessaril" treadin- into constitutional =uestions.
13
It is also the petitionerCs sub!ission
that the increase in the a+ard of !oral da!a-es fro! the P#$,$$$.$$ ad/ud-ed b" the
trial court +hich +as not appealed b" respondent Sun-a +ho felt that the a+ard +as
9perfect,9 9sound,9 and 9+ise,9 to a 9+hoppin- P:$,$$$.$$9 i!posed b" the respondent
Inter!ediate )ppellate Court *no+ Court of )ppeals, a!ounted to a -rave abuse of
discretion.
1,
1hus, the increase in the a+ard +hich the respondent appellate court
/ustified b" the accountin- error co!!itted b" the petitioner, should not be
countenanced, as the sa!e had no le-al basis.
15
It rationali6es that the respondent
courtCs invocation of a pendin- bill in the le-islature, 3atasan 3ill #$8:, to support its
decision, is untenable.
16
Bastl", it deposits thatRebosura is riot on all fours +ith the case
at bar and therefore adherence thereto +as !isplaced,
1-
citin- the follo+in-
distinctions2
18
%, In Rebosura, there +as unla+ful entr" +hile in this case, there +as
noneE 7, in the for!er, the plaintiff did not breach the contract +hereas in this case there
is a findin- b" the court a quo of such violationE #, in the for!er, the contract +as
deno!inated Deed of Sale +ith Reservation of 1itle, +hile in this case, the contracts
referred to are the Pro!issor" Note and Deed of Mort-a-eE ;, in the for!er, the
defendant Orope6a +as an unpaid seller +hile the plaintiff Rebosura +as the bu"er,
+hereas, in this case, the petitioner is the pro!issor5!ort-a-ee +hile Sun-a is the
pro!issor5!ort-a-orE :, in the for!er, there +as no notice of delin=uenc" and
repossession, +hereas, in this case, there is notice and de!andE and (, in the for!er,
the contract +as in fine print, +hereas, in this case, it is not so.
On the other side, the private respondent !aintains that the respondent court did not
abuse its discretion, stressin- that a careful readin- and understandin- of the assailed
decision +ould !anifest that all assi-ned errors +ere resolved, citin- portions of the
decision +hich dealt specificall" +ith each of the errors assi-ned.
19
Ae !aintains that
the a+ard of !oral da!a-es, i!peached as e0a--erated and unconscionable, is
/ustified b" the pra"er in the appelleeCs *respondent Sun-aCs brief, to +it2 DR1AER
REMEDIES )ND REBIES DEEMED 4DS1 )ND EFDI1)3BE DNDER )ND @I1AIN
1AE PREMISES )RE PR)>ED OR.
+0
Bastl", the private respondent sub!its that the
references to 3atasan 3ill No. #$8: and Rebosura +ere !ere passin- co!!ents +hich
did not in an" +a" detract fro! the validit" of the assailed decision.
+1
)fter carefull" considerin- and +ei-hin- all the ar-u!ents of both prota-onists, +e hold
that the respondent court co!!itted a -rave abuse of discretion in increasin-
e0trava-antl" the a+ard of !oral da!a-es and in -rantin- liti-ation e0penses. In those
respects, the petition is -ranted and to that e0tent the =uestioned decision is !odified.
1here is no -ainsa"in- that the plaintiff5appellee *respondent Sun-a did not appeal fro!
the decision of the courta quo +hich a+arded hi! the su! of P#$,$$$.$$ b" +a" of
!oral da!a-es. 9@ell settled is the rule in this /urisdiction that +henever an appeal is
ta.en in a civil case an appellee +ho has not hi!self appealed cannot obtain fro! the
appellate court an" affir!ative relief other than the ones -ranted in the decision of the
court belo+.9
++
Veril" the respondent court disre-arded such a +ell settled rule +hen it
increased the a+ard for !oral da!a-es fro! P#$,$$$.$$ to P:$,$$$.$$,
not+ithstandin- the fact that the private respondent did not appeal fro! the /ud-!ent of
the trial court, an act indicative of -rave abuse of discretion a!ountin- to lac. of
/urisdiction.
Certiorari lies +hen a court has acted +ithout or in e0cess of /urisdiction or +ith -rave
abuse of discretion. C+ithout /urisdictionC !eans that the court acted +ith absolute +ant
of /urisdiction. 1here is 9e0cess of /urisdiction9 +here the court has /urisdiction but has
transcended the sa!e or acted +ithout an" statutor" authorit" Beun- 3en vs. OC3rien,
#' Phils., %'7E Salvador Ca!pos " CI) vs. Del Rosario, ;% Phil., ;:,. 9<rave abuse of
discretion9 i!plies such capricious and +hi!sical e0ercise of /ud-!ent as is e=uivalent
to lac. of /urisdiction *)bad Santos vs. Province of 1arlac, #' Off. <a6., '#., or in other
+ords, +here the po+er is e0ercised in an arbitrar" or despotic !anner b" reason of
passion or personal hostilit", and it !ust be so patent and -ross as to a!ount to an
3
evasion of positive dut" or to a virtual refusal to perfor! the dut" en/oined or to act at all
in conte!plation of la+. *1alavera5Buna vs. Nable, #' Off. <a6., (7,.
+3
Or, as held in the recent case of Robert Young vs. Julio A. ulit, Jr.,
+,
9*,or certiorari to
lie, there !ust be capricious, arbitrar", and +hi!sical e0ercise of po+er, the ver"
antithesis of the /udicial prero-ative in accordance +ith centuries of civil la+ and
co!!on la+ tradition.9
@e had occasion to state that 9there is no hard and fast rule in the deter!ination of +hat
+ould be a fair a!ount of !oral da!a-es, since each case !ust be -overned b" its o+n
peculiar circu!stances.9
+5
3e that as it !a" and in a!plification of this -enerali6ation,
+e set the criterion that 9in the case of !oral da!a-es, the "ardstic. should be that the
9a!ount a+arded should not be palpabl" and scandalousl" e0cessive9 so as to indicate
that it +as the result of passion, pre/udice or corruption on the part of the trial court ... .
Moreover, the actual losses sustained b" the a--rieved parties and the -ravit" of the
in/uries !ust be considered in arrivin- at reasonable levels ... .9
+6
1here is no dispute that the private respondent, a business!an and o+ner of the N3S
Machineries Mar.etin- and N)P5N)P 1ransit, is entitled to !oral da!a-es due to the
un+arranted sei6ure of the !inibus Ma6da, alle-edl" because he +as delin=uent in the
pa"!ent of its !onthl" a!orti6ations, +hich as stated above, turned out to be
incorrect.
+-
No doubt such intent tainted private respondent Sun-aCs reputation in the
business co!!unit", thus causin- hi! !ental an-uish, serious an0iet", bes!irched
reputation, +ounded feelin-s, !oral shoc., and social hu!iliation. Considerin-,
ho+ever, that respondent Sun-a +as dispossessed of his !otor vehicle for barel" three
da"s, that is, fro! October 7%, %&8' to October 7#, %&8', possession of +hich +as
restored to hi! soon after the accountin- errors +ere ironed out, +e find that the a+ard
of !oral da!a-es even in the su! of P#$,$$$.$$ is e0cessive for it !ust be
e!phasi6ed that 9da!a-es are not intended to enrich the co!plainant at the e0pense of
a defendant. 1he" are a+arded onl" to enable the in/ured parties to obtain !eans,
diversions or a!use!ents that +ill serve to alleviate the !oral sufferin-s the in/ured
parties have under-one b" reason of defendantCs culpable action. In other +ords, the
a+ard of !oral da!a-es is ai!ed at a restoration +ithin the li!its of the possible, of the
spiritual status quo anteE and therefore it !ust be proportionate to the sufferin-
inflicted.9
+8
Moreover, 9*M,oral da!a-es thou-h not incapable of pecuniar" esti!ations,
are in the cate-or" of an a+ard desi-ned to co!pensate the clai!ant for actual in/ur"
suffered and not to i!pose a penalt" on the +ron-doer.
+9
It behooves us therefore to reiterate the caveat to lo+er courts 9to -uard a-ainst the
a+ard of e0orbitant da!a-es that are +a" out of proportion to the environ!ental
circu!stances of a case and +hich ti!e and a-ain, this Court has reduced or
eli!inated. 4udicial discretion -ranted to the courts in the assess!ent of da!a-es !ust
al+a"s be e0ercised +ith balanced restraints and !easured ob/ectivit".
30
@e do not a-ree +ith private respondentCs ar-u!ent that the increase in the a+ard of
!oral da!a-es is /ustified b" the pra"er in its brief, to +it2 DR1AER REMEDIES )ND
REBIES DEEMED 4DS1 )ND EFDI1)3BE DNDER )ND @I1AIN 1AE PREMISES
)RE PR)>ED OR. Such state!ent is usuall" e0tant in practicall" all pleadin-s as a
final state!entE it is rhetorical flourish as it +ere and could not be a substitute for appeal
as re=uired b" the rules for 9the appellee cannot see. !odification or reversal of the
/ud-!ent or affir!ative relief, unless he has also appealed therefro!.9
31
@ith re-ard to the a+ard of liti-ation e0penses in the su! of P:,$$$.$$, the sa!e is
hereb" disallo+ed, there bein- no price for liti-ation.
@AEREORE, the petition is partiall" <R)N1ED. 1he a+ard of !oral da!a-es is
REDDCED to P%$,$$$.$$ and the -rant of liti-ation e0penses is EBIMIN)1ED. 1he rest
of the /ud-!ent is )IRMED. @ithout costs.
SO ORDERED.
!elencio"#errera $C%airperson&, 'aras, and Regalado, JJ., concur.
'adilla, J., too( no part.
4
Republic of the Philippines
SUPREME COURT
Manila
1AIRD DIVISION
G.R. No. 15-,93 Febr.%r/ 5, +00-
R0#LNO, 1.b1t2t.te' b/ 321 3e2r1, *OSEFN#, ROL#N"O %&' FERN#N"O,
ERNESTO, LEONOR#, ((#NO, *R., L(R#"O %&' ENR4UET#, %55 1.r&%me'
OESMER, Petitioners,
vs.
P#R#SO "E!ELOPMENT CORPOR#TON, Respondent.
D E C I S I O N
C$CO-N#0#RO, J.:
3efore this Court is a Petition for Revie+ on Certiorari under Rule ;: of the %&&8
Revised Rules of Civil Procedure see.in- to reverse and set aside the Court of )ppeals
Decision
%
dated 7( )pril 7$$7 in C)5<.R. CV No. :#%#$ entitled, Ri6alino, Ernesto,
Beonora, 3ibiano, 4r., Bibrado, Enri=ueta, )dolfo, and 4esus, all surna!ed Oes!er vs.
Paraiso Develop!ent Corporation, as !odified b" its Resolution
7
dated ; March 7$$#,
declarin- the Contract to Sell valid and bindin- +ith respect to the undivided
proportionate shares of the si0 si-natories of the said docu!ent, herein petitioners,
na!el"2 Ernesto, Enri=ueta, Bibrado, Ri6alino, 3ibiano, 4r., and Beonora *all surna!ed
Oes!er,E and orderin- the! to e0ecute the Deed of )bsolute Sale concernin- their (?'
share over the sub/ect parcels of land in favor of herein respondent Paraiso
Develop!ent Corporation, and to pa" the latter the attorne"Gs fees plus costs of the suit.
1he assailed Decision, as !odified, li.e+ise ordered the respondent to tender pa"!ent
to the petitioners in the a!ount of P#,7%(,:($.$$ representin- the balance of the
purchase price of the sub/ect parcels of land.
1he facts of the case are as follo+s2
Petitioners Ri6alino, Ernesto, Beonora, 3ibiano, 4r., Bibrado, and Enri=ueta, all
surna!ed Oes!er, to-ether +ith )dolfo Oes!er *)dolfo, and 4esus Oes!er *4esus,,
are brothers and sisters, and the co5o+ners of undivided shares of t+o parcels of
a-ricultural and tenanted land situated in 3aran-a" Dlon- 1ubi-, Car!ona, Cavite,
identified as Bot 87$ +ith an area of ;$,:$8 s=uare !eters *s=. !., and Bot '#;
containin- an area of %;,8(& s=. !., or a total land area of ::,78( s=. !. 3oth lots are
unre-istered and ori-inall" o+ned b" their parents, 3ibiano Oes!er and Encarnacion
Duru!pili, +ho declared the lots for ta0ation purposes under 1a0 Declaration No.
#;#'
#
*cancelled b" I.D. No. ($(;5), for Bot 87$ and 1a0 Declaration No.
#;#8
;
*cancelled b" I.D. No. :(7&, for Bot '#;. @hen the spouses Oes!er died,
petitioners, to-ether +ith )dolfo and 4esus, ac=uired the lots as heirs of the for!er b"
ri-ht of succession.
Respondent Paraiso Develop!ent Corporation is .no+n to be en-a-ed in the real
estate business.
So!eti!e in March %&'&, Ro-elio Paular, a resident and for!er Municipal Secretar" of
Car!ona, Cavite, brou-ht alon- petitioner Ernesto to !eet +ith a certain Sotero Bee,
President of respondent Paraiso Develop!ent Corporation, at Otani Aotel in Manila.
1he said !eetin- +as for the purpose of bro.erin- the sale of petitionersG properties to
respondent corporation.
Pursuant to the said !eetin-, a Contract to Sell
:
+as drafted b" the E0ecutive )ssistant
of Sotero Bee, Inocencia )l!o. On % )pril %&'&, petitioners Ernesto and Enri=ueta
si-ned the aforesaid Contract to Sell. ) chec. in the a!ount of P%$$,$$$.$$, pa"able to
Ernesto, +as -iven as option !one". So!eti!e thereafter, Ri6alino, Beonora, 3ibiano,
4r., and Bibrado also si-ned the said Contract to Sell. Ao+ever, t+o of the brothers,
)dolfo and 4esus, did not si-n the docu!ent.
On : )pril %&'&, a duplicate cop" of the instru!ent +as returned to respondent
corporation. On 7% )pril %&'&, respondent brou-ht the sa!e to a notar" public for
notari6ation.
In a letter
(
dated % Nove!ber %&'&, addressed to respondent corporation, petitioners
infor!ed the for!er of their intention to rescind the Contract to Sell and to return the
a!ount of P%$$,$$$.$$ -iven b" respondent as option !one".
Respondent did not respond to the aforesaid letter. On #$ Ma" %&&%, herein petitioners,
to-ether +ith )dolfo and 4esus, filed a Co!plaint
8
for Declaration of Nullit" or for
)nnul!ent of Option )-ree!ent or Contract to Sell +ith Da!a-es before the Re-ional
1rial Court *R1C, of 3acoor, Cavite. 1he said case +as doc.eted as Civil Case No.
3CV5&%5;&.
Durin- trial, petitioner Ri6alino died. Dpon !otion of petitioners, the trial court issued an
Order,
'
dated %( Septe!ber %&&7, to the effect that the deceased petitioner be
substituted b" his survivin- spouse, 4osefina O. Oes!er, and his children, Rolando O.
Oes!er and ernando O. Oes!er. Ao+ever, the na!e of Ri6alino +as retained in the
title of the case both in the R1C and the Court of )ppeals.
)fter trial on the !erits, the lo+er court rendered a Decision
&
dated 78 March %&&( in
favor of the respondent, the dispositive portion of +hich reads2
@AEREORE, pre!ises considered, /ud-!ent is hereb" rendered in favor of herein
HrespondentI Paraiso Develop!ent Corporation. 1he assailed Contract to Sell is valid
and bindin- onl" to the undivided proportionate share of the si-nator" of this docu!ent
5
and recipient of the chec., Hherein petitionerI co5o+ner Ernesto Duru!pili Oes!er. 1he
latter is hereb" ordered to e0ecute the Contract of )bsolute Sale concernin- his %?'
share over the sub/ect t+o parcels of land in favor of herein HrespondentI corporation,
and to pa" the latter the attorne"Gs fees in the su! of 1en 1housand *P%$,$$$.$$, Pesos
plus costs of suit.
1he counterclai! of HrespondentI corporation is hereb" Dis!issed for lac. of !erit.
%$
Dnsatisfied, respondent appealed the said Decision before the Court of )ppeals. On 7(
)pril 7$$7, the appellate court rendered a Decision !odif"in- the Decision of the court a
=uo b" declarin- that the Contract to Sell is valid and bindin- +ith respect to the
undivided proportionate shares of the si0 si-natories of the said docu!ent, herein
petitioners, na!el"2 Ernesto, Enri=ueta, Bibrado, Ri6alino, 3ibiano, 4r., and Beonora *all
surna!ed Oes!er,. 1he decretal portion of the said Decision states that2
@AEREORE, pre!ises considered, the Decision of the court a =uo is hereb"
MODIIED. 4ud-!ent is hereb" rendered in favor of herein HrespondentI Paraiso
Develop!ent Corporation. 1he assailed Contract to Sell is valid and bindin- +ith respect
to the undivided proportionate share of the si0 *(, si-natories of this docu!ent, Hherein
petitionersI, na!el", Ernesto, Enri=ueta, Bibrado, Ri6alino, 3ibiano, 4r., and Beonora *all
surna!ed Oes!er,. 1he said HpetitionersI are hereb" ordered to e0ecute the Deed of
)bsolute Sale concernin- their (?' share over the sub/ect t+o parcels of land and in
favor of herein HrespondentI corporation, and to pa" the latter the attorne"Gs fees in the
su! of 1en 1housand Pesos *P%$,$$$.$$, plus costs of suit.
%%
)--rieved b" the above5!entioned Decision, petitioners filed a Motion for
Reconsideration of the sa!e on 7 4ul" 7$$7. )ctin- on petitionersG Motion for
Reconsideration, the Court of )ppeals issued a Resolution dated ; March 7$$#,
!aintainin- its Decision dated 7( )pril 7$$7, +ith the !odification that respondent
tender pa"!ent to petitioners in the a!ount of P#,7%(,:($.$$, representin- the balance
of the purchase price of the sub/ect parcels of land. 1he dispositive portion of the said
Resolution reads2
@AEREORE, pre!ises considered, the assailed Decision is hereb"
!odified.)awp%i).net 4ud-!ent is hereb" rendered in favor of herein HrespondentI
Paraiso Develop!ent Corporation. 1he assailed Contract to Sell is valid and bindin-
+ith respect to the undivided proportionate shares of the si0 *(, si-natories of this
docu!ent, Hherein petitionersI, na!el", Ernesto, Enri=ueta, Bibrado, Ri6alino, 3ibiano,
4r., and Beonora *all surna!ed Oes!er,. 1he said HpetitionersI are hereb" ordered to
e0ecute the Deed of )bsolute Sale concernin- their (?' share over the sub/ect t+o
parcels of land in favor of herein HrespondentI corporation, and to pa" the latter
attorne"Gs fees in the su! of 1en 1housand Pesos *P%$,$$$.$$, plus costs of suit.
Respondent is li.e+ise ordered to tender pa"!ent to the above5na!ed HpetitionersI in
the a!ount of 1hree Million 1+o Aundred Si0teen 1housand ive Aundred Si0t" Pesos
*P#,7%(,:($.$$, representin- the balance of the purchase price of the sub/ect t+o
parcels of land.
%7
Aence, this Petition for Revie+ on Certiorari.
Petitioners co!e before this Court ar-uin- that the Court of )ppeals erred2
I. On a =uestion of la+ in not holdin- that, the supposed Contract to Sell *E0hibit D, is
not bindin- upon petitioner Ernesto Oes!erGs co5o+ners *herein petitioners Enri=ueta,
Bibrado, Ri6alino, 3ibiano, 4r., and Beonora,.
II. On a =uestion of la+ in not holdin- that, the supposed Contract to Sell *E0hibit D, is
void alto-ether considerin- that respondent itself did not si-n it as to indicate its consent
to be bound b" its ter!s. Moreover, E0hibit D is reall" a unilateral pro!ise to sell +ithout
consideration distinct fro! the price, and hence, void.
Petitioners assert that the si-natures of five of the! na!el"2 Enri=ueta, Bibrado,
Ri6alino, 3ibiano, 4r., and Beonora, on the !ar-ins of the supposed Contract to Sell did
not confer authorit" on petitioner Ernesto as a-ent to sell their respective shares in the
=uestioned properties, and hence, for lac. of +ritten authorit" fro! the above5na!ed
petitioners to sell their respective shares in the sub/ect parcels of land, the supposed
Contract to Sell is void as to the!. Neither do their si-natures si-nif" their consent to
directl" sell their shares in the =uestioned properties. )ssu!in- that the si-natures
indicate consent, such consent +as !erel" conditional. 1he effectivit" of the alle-ed
Contract to Sell +as sub/ect to a suspensive condition, +hich is the approval of the sale
b" all the co5o+ners.
Petitioners also assert that the supposed Contract to Sell *E0hibit D,, contrar" to the
findin-s of the Court of )ppeals, is not couched in si!ple lan-ua-e.
1he" further clai! that the supposed Contract to Sell does not bind the respondent
because the latter did not si-n the said contract as to indicate its consent to be bound b"
its ter!s. urther!ore, the" !aintain that the supposed Contract to Sell is reall" a
unilateral pro!ise to sell and the option !one" does not bind petitioners for lac. of
cause or consideration distinct fro! the purchase price.
1he Petition is bereft of !erit.
It is true that the si-natures of the five petitioners, na!el"2 Enri=ueta, Bibrado, Ri6alino,
3ibiano, 4r., and Beonora, on the Contract to Sell did not confer authorit" on petitioner
Ernesto as a-ent authori6ed to sell their respective shares in the =uestioned properties
because of )rticle %'8; of the Civil Code, +hich e0pressl" provides that2
)rt. %'8;. @hen a sale of a piece of land or an" interest therein is throu-h an a-ent, the
authorit" of the latter shall be in +ritin-E other+ise, the sale shall be void.
1he la+ itself e0plicitl" re=uires a +ritten authorit" before an a-ent can sell an
i!!ovable. 1he confer!ent of such an authorit" should be in +ritin-, in as clear and
precise ter!s as possible. It is +orth notin- that petitionersG si-natures are found in the
6
Contract to Sell. 1he Contract is absolutel" silent on the establish!ent of an" principal5
a-ent relationship bet+een the five petitioners and their brother and co5petitioner
Ernesto as to the sale of the sub/ect parcels of land. 1hus, the Contract to Sell, althou-h
si-ned on the !ar-in b" the five petitioners, is not sufficient to confer authorit" on
petitioner Ernesto to act as their a-ent in sellin- their shares in the properties in
=uestion.
Ao+ever, despite petitioner ErnestoGs lac. of +ritten authorit" fro! the five petitioners to
sell their shares in the sub/ect parcels of land, the supposed Contract to Sell re!ains
valid and bindin- upon the latter.
)s can be clearl" -leaned fro! the contract itself, it is not onl" petitioner Ernesto +ho
si-ned the said Contract to SellE the other five petitioners also personall" affi0ed their
si-natures thereon. 1herefore, a +ritten authorit" is no lon-er necessar" in order to sell
their shares in the sub/ect parcels of land because, b" affi0in- their si-natures on the
Contract to Sell, the" +ere not sellin- their shares throu-h an a-ent but, rather, the"
+ere sellin- the sa!e directl" and in their o+n ri-ht.
1he Court also finds untenable the follo+in- ar-u!ents raised b" petitioners to the
effect that the Contract to Sell is not bindin- upon the!, e0cept to Ernesto, because2 *%,
the si-natures of five of the petitioners do not si-nif" their consent to sell their shares in
the =uestioned properties since petitioner Enri=ueta !erel" si-ned as a +itness to the
said Contract to Sell, and that the other petitioners, na!el"2 Bibrado, Ri6alino, Beonora,
and 3ibiano, 4r., did not understand the i!portance and conse=uences of their action
because of their lo+ de-ree of education and the contents of the aforesaid contract +ere
not read nor e0plained to the!E and *7, assu!in- that the si-natures indicate consent,
such consent +as !erel" conditional, thus, the effectivit" of the alle-ed Contract to Sell
+as sub/ect to a suspensive condition, +hich is the approval b" all the co5o+ners of the
sale.
It is +ell5settled that contracts are perfected b" !ere consent, upon the acceptance b"
the offeree of the offer !ade b" the offeror. ro! that !o!ent, the parties are bound
not onl" to the fulfill!ent of +hat has been e0pressl" stipulated but also to all the
conse=uences +hich, accordin- to their nature, !a" be in .eepin- +ith -ood faith,
usa-e and la+. 1o produce a contract, the acceptance !ust not =ualif" the ter!s of the
offer. Ao+ever, the acceptance !a" be e0press or i!plied. or a contract to arise, the
acceptance !ust be !ade .no+n to the offeror. )ccordin-l", the acceptance can be
+ithdra+n or revo.ed before it is !ade .no+n to the offeror.
%#
In the case at bar, the Contract to Sell +as perfected +hen the petitioners consented to
the sale to the respondent of their shares in the sub/ect parcels of land b" affi0in- their
si-natures on the said contract. Such si-natures sho+ their acceptance of +hat has
been stipulated in the Contract to Sell and such acceptance +as !ade .no+n to
respondent corporation +hen the duplicate cop" of the Contract to Sell +as returned to
the latter bearin- petitionersG si-natures.
)s to petitioner Enri=uetaGs clai! that she !erel" si-ned as a +itness to the said
contract, the contract itself does not sa" so. 1here +as no sin-le indication in the said
contract that she si-ned the sa!e !erel" as a +itness. 1he fact that her si-nature
appears on the ri-ht5hand !ar-in of the Contract to Sell is insi-nificant. 1he contract
indisputabl" referred to the 9Aeirs of 3ibiano and Encarnacion Oes!er,9 and since there
is no sho+in- that Enri=ueta si-ned the docu!ent in so!e other capacit", it can be
safel" assu!ed that she did so as one of the parties to the sale.
E!phasis should also be -iven to the fact that petitioners Ernesto and Enri=ueta
concurrentl" si-ned the Contract to Sell. )s the Court of )ppeals !entioned in its
Decision,
%;
the records of the case spea. of the fact that petitioner Ernesto, to-ether +ith
petitioner Enri=ueta, !et +ith the representatives of the respondent in order to finali6e
the ter!s and conditions of the Contract to Sell. Enri=ueta affi0ed her si-nature on the
said contract +hen the sa!e +as drafted. She even ad!itted that she understood the
underta.in- that she and petitioner Ernesto !ade in connection +ith the contract. She
li.e+ise disclosed that pursuant to the ter!s e!bodied in the Contract to Sell, she
updated the pa"!ent of the real propert" ta0es and transferred the 1a0 Declarations of
the =uestioned properties in her na!e.
%:
Aence, it cannot be -ainsaid that she !erel"
si-ned the Contract to Sell as a +itness because she did not onl" activel" participate in
the ne-otiation and e0ecution of the sa!e, but her subse=uent actions also reveal an
atte!pt to co!pl" +ith the conditions in the said contract.
@ith respect to the other petitionersG assertion that the" did not understand the
i!portance and conse=uences of their action because of their lo+ de-ree of education
and because the contents of the aforesaid contract +ere not read nor e0plained to the!,
the sa!e cannot be sustained.
@e onl" have to =uote the pertinent portions of the Court of )ppeals Decision, clear and
concise, to dispose of this issue. 1hus,
irst, the Contract to Sell is couched in such a si!ple lan-ua-e +hich is undoubtedl"
eas" to read and understand. 1he ter!s of the Contract, specificall" the a!ount
of P%$$,$$$.$$ representin- the option !one" paid b" HrespondentI corporation, the
purchase price of P($.$$ per s=uare !eter or the total a!ount ofP#,#%(,:($.$$ and a
brief description of the sub/ect properties are +ell5indicated thereon that an" prudent
and !ature !an +ould have .no+n the nature and e0tent of the transaction
encapsulated in the docu!ent that he +as si-nin-.
Second, the follo+in- circu!stances, as testified b" the +itnesses and as can be
-leaned fro! the records of the case clearl" indicate the HpetitionersGI intention to be
bound b" the stipulations chronicled in the said Contract to Sell.
)s to HpetitionerI Ernesto, there is no dispute as to his intention to effect the alienation of
the sub/ect propert" as he in fact +as the one +ho initiated the ne-otiation process and
cul!inated the sa!e b" affi0in- his si-nature on the Contract to Sell and b" ta.in-
receipt of the a!ount of P%$$,$$$.$$ +hich for!ed part of the purchase price.
7
0 0 0 0
)s to HpetitionerI Bibrado, the Happellate courtI finds it preposterous that he +illin-l"
affi0ed his si-nature on a docu!ent +ritten in a lan-ua-e *En-lish, that he purportedl"
does not understand. Ae testified that the docu!ent +as /ust brou-ht to hi! b" an %'
"ear old niece na!ed 3ab" and he +as told that the docu!ent +as for a chec. to be
paid to hi!. Ae readil" si-ned the Contract to Sell +ithout consultin- his other siblin-s.
1hereafter, he e0erted no effort in co!!unicatin- +ith his brothers and sisters re-ardin-
the docu!ent +hich he had si-ned, did not in=uire +hat the chec. +as for and did not
thereafter as. for the chec. +hich is purportedl" due to hi! as a result of his si-nin- the
said Contract to Sell. *1SN, 7' Septe!ber %&&#, pp. 7757#,
1he Happellate courtI notes that Bibrado is a ;# "ear old fa!il" !an *1SN, 7' Septe!ber
%&&#, p. %&,. )s such, he is e0pected to act +ith that ordinar" de-ree of care and
prudence e0pected of a -ood father of a fa!il". Ais un+ittin- testi!on" is /ust divinel"
disbelievin-.
1he other HpetitionersI *Ri6alino, Beonora and 3ibiano 4r., are li.e+ise bound b" the said
Contract to Sell. 1he theor" adopted b" the HpetitionersI that because of their lo+ de-ree
of education, the" did not understand the contents of the said Contract to Sell is devoid
of !erit. 1he Happellate courtI also notes that )dolfo *one of the co5heirs +ho did not
si-n, also possess the sa!e de-ree of education as that of the si-nin- co5heirs *1SN,
%: October %&&%, p. %&,. Ae, ho+ever, is e!plo"ed at the Provincial 1reasur" Office at
1rece Martire6, Cavite and has even acco!panied Ro-elio Paular to the )ssessorGs
Office to locate certain !issin- docu!ents +hich +ere needed to transfer the titles of
the sub/ect properties. *1SN, 7' 4anuar" %&&;, pp. 7( J #:, Si!ilarl", the other co5heirs
HpetitionersI, li.e )dolfo, are far fro! i-norant, !ore so, illiterate that the" can be
e0tricated fro! their obli-ations under the Contract to Sell +hich the" voluntaril" and
.no+in-l" entered into +ith the HrespondentI corporation.
1he Supre!e Court in the case of Cecilia Mata v. Court of )ppeals *7$8 SCR) 8:#
H%&&7I,, citin- the case of 1an Sua Sia v. >u 3aio Sontua *:( Phil. 8%%,, instructivel"
ruled as follo+s2
91he Court does not accept the petitionerGs clai! that she did not understand the ter!s
and conditions of the transactions because she onl" reached <rade 1hree and +as
alread" (# "ears of a-e +hen she si-ned the docu!ents. She +as literate, to be-in
+ith, and her a-e did not !a.e her senile or inco!petent. 0 0 0.
)t an" rate, Metroban. had no obli-ation to e0plain the docu!ents to the petitioner as
no+here has it been proven that she is unable to read or that the contracts +ere +ritten
in a lan-ua-e not .no+n to her. It +as her responsibilit" to infor! herself of the !eanin-
and conse=uence of the contracts she +as si-nin- and, if she found the! difficult to
co!prehend, to consult other persons, preferabl" la+"ers, to e0plain the! to her. )fter
all, the transactions involved not onl" a fe+ hundred or thousand pesos but, indeed,
hundreds of thousands of pesos.
)s the Court has held2
0 0 0 1he rule that one +ho si-ns a contract is presu!ed to .no+ its contents has been
applied even to contracts of illiterate persons on the -round that if such persons are
unable to read, the" are ne-li-ent if the" fail to have the contract read to the!. If a
person cannot read the instru!ent, it is as !uch his dut" to procure so!e reliable
persons to read and e0plain it to hi!, before he si-ns it, as it +ould be to read it before
he si-ned it if he +ere able to do and his failure to obtain a readin- and e0planation of it
is such -ross ne-li-ence as +ill estop fro! avoidin- it on the -round that he +as
i-norant of its contents.9
%(
1hat the petitioners reall" had the intention to dispose of their shares in the sub/ect
parcels of land, irrespective of +hether or not all of the heirs consented to the said
Contract to Sell, +as unveiled b" )dolfoGs testi!on" as follo+s2
)11>. <)MO2 1his alle-ed a-ree!ent bet+een "ou and "our other brothers and sisters
that unless ever"bod" +ill a-ree, the properties +ould not be sold, +as that a-ree!ent
in +ritin-K
@I1NESS2 No sir.
)11>. <)MO2 @hat "ou are sa"in- is that +hen "our brothers and sisters e0cept 4esus
and "ou did not si-n that a-ree!ent +hich had been !ar.ed as HE0hibitI 9D9, "our
brothers and sisters +ere -rossl" violatin- "our a-ree!ent.
@I1NESS2 >es, sir, the" violated +hat +e have a-reed upon.
%8
@e also cannot sustain the alle-ation of the petitioners that assu!in- the si-natures
indicate consent, such consent +as !erel" conditional, and that, the effectivit" of the
alle-ed Contract to Sell +as sub/ect to the suspensive condition that the sale be
approved b" all the co5o+ners. 1he Contract to Sell is clear enou-h. It is a cardinal rule
in the interpretation of contracts that if the ter!s of a contract are clear and leave no
doubt upon the intention of the contractin- parties, the literal !eanin- of its stipulation
shall control.
%'
1he ter!s of the Contract to Sell !ade no !ention of the condition that
before it can beco!e valid and bindin-, a unani!ous consent of all the heirs is
necessar". 1hus, +hen the lan-ua-e of the contract is e0plicit, as in the present case,
leavin- no doubt as to the intention of the parties thereto, the literal !eanin- of its
stipulation is controllin-.
In addition, the petitioners, bein- o+ners of their respective undivided shares in the
sub/ect properties, can dispose of their shares even +ithout the consent of all the co5
heirs. )rticle ;&# of the Civil Code e0pressl" provides2
)rticle ;&#. Each co5o+ner shall have the full o+nership of his part and of the fruits and
benefits pertainin- thereto, and he !a" therefore alienate, assign or mortgage it, and
even substitute another person in its en/o"!ent, e0cept +hen personal ri-hts are
8
involved. 3ut the effect of the alienation or the !ort-a-e, +ith respect to the co5o+ners,
shall be limited to the portion +hich !a" be allotted to hi! in the division upon the
ter!ination of the co5o+nership. HE!phases supplied.I
Conse=uentl", even +ithout the consent of the t+o co5heirs, )dolfo and 4esus, the
Contract to Sell is still valid and bindin- +ith respect to the (?' proportionate shares of
the petitioners, as properl" held b" the appellate court.
1herefore, this Court finds no error in the findin-s of the Court of )ppeals that all the
petitioners +ho +ere si-natories in the Contract to Sell are bound thereb".
1he final ar-u!ents of petitioners state that the Contract to Sell is void alto-ether
considerin- that respondent itself did not si-n it as to indicate its consent to be bound b"
its ter!sE and !oreover, the Contract to Sell is reall" a unilateral pro!ise to sell +ithout
consideration distinct fro! the price, and hence, a-ain, void. Said ar-u!ents !ust
necessaril" fail.
1he Contract to Sell is not void !erel" because it does not bear the si-nature of the
respondent corporation. Respondent corporationGs consent to be bound b" the ter!s of
the contract is sho+n in the uncontroverted facts +hich established that there +as partial
perfor!ance b" respondent of its obli-ation in the said Contract to Sell +hen it tendered
the a!ount of P%$$,$$$.$$ to for! part of the purchase price, +hich +as accepted and
ac.no+led-ed e0pressl" b" petitioners. 1herefore, b" force of la+, respondent is
re=uired to co!plete the pa"!ent to enforce the ter!s of the contract. )ccordin-l",
despite the absence of respondentGs si-nature in the Contract to Sell, the for!er cannot
evade its obli-ation to pa" the balance of the purchase price.
)s a final point, the Contract to Sell entered into b" the parties is not a unilateral pro!ise
to sell !erel" because it used the +ord option !one" +hen it referred to the a!ount
of P%$$,$$$.$$, +hich also for! part of the purchase price.
Settled is the rule that in the interpretation of contracts, the ascertain!ent of the
intention of the contractin- parties is to be dischar-ed b" loo.in- to the +ords the" used
to pro/ect that intention in their contract, all the +ords, not /ust a particular +ord or t+o,
and +ords in conte0t, not +ords standin- alone.
%&
In the instant case, the consideration of P%$$,$$$.$$ paid b" respondent to petitioners
+as referred to as 9option !one".9 Ao+ever, a careful e0a!ination of the +ords used in
the contract indicates that the !one" is not option !one" but earnest money. 9Earnest
!one"9 and 9option !one"9 are not the sa!e but distin-uished thus2 *a, earnest !one"
is part of the purchase price, +hile option !one" is the !one" -iven as a distinct
consideration for an option contractE *b, earnest !one" is -iven onl" +here there is
alread" a sale, +hile option !one" applies to a sale not "et perfectedE and, *c, +hen
earnest !one" is -iven, the bu"er is bound to pa" the balance, +hile +hen the +ould5be
bu"er -ives option !one", he is not re=uired to bu", but !a" even forfeit it dependin- on
the ter!s of the option.
7$
1he su! of P%$$,$$$.$$ +as part of the purchase price. )lthou-h the sa!e +as
deno!inated as 9option !one",9 it is actuall" in the nature of earnest !one" or do+n
pa"!ent +hen considered +ith the other ter!s of the contract. Doubtless, the
a-ree!ent is not a !ere unilateral pro!ise to sell, but, indeed, it is a Contract to Sell as
both the trial court and the appellate court declared in their Decisions.
@AEREORE, pre!ises considered, the Petition is DENIED, and the Decision and
Resolution of the Court of )ppeals dated 7( )pril 7$$7 and ; March 7$$#, respectivel",
are #FFRME", thus, *a, the Contract to Sell is"ECL#RE" valid and bindin- +ith
respect to the undivided proportionate shares in the sub/ect parcels of land of the si0
si-natories of the said docu!ent, herein petitioners Ernesto, Enri=ueta, Bibrado,
Ri6alino, 3ibiano, 4r., and Beonora *all surna!ed Oes!er,E *b, respondent
is OR"ERE" to tender pa"!ent to petitioners in the a!ount ofP#,7%(,:($.$$
representin- the balance of the purchase price for the latterGs shares in the sub/ect
parcels of landE and *c, petitioners are further OR"ERE" to e0ecute in favor of
respondent the Deed of )bsolute Sale coverin- their shares in the sub/ect parcels of
land after receipt of the balance of the purchase price, and to pa" respondent attorne"Gs
fees plus costs of the suit. Costs a-ainst petitioners.
SO ORDERED.
9
Republic of the Philippines
SUPREME COURT
Manila
EN 3)NC
G.R. No. L-35-0+ M%/ +9, 19-3
"OMNGO ". RU(#S, plaintiff5appellant,
vs.
S##S (#TLLER, defendant5appellee.
*regorio !. Rubias for plaintiff"appellant.
+icente R. Acsay for defendant"appellee.
TEE$#N6EE, J.:
In this appeal certified b" the Court of )ppeals to this Court as involvin- purel" le-al
=uestions, +e affir! the dis!issal order rendered b" the Iloilo court of first instance after
pre5trial and sub!ittal of the pertinent docu!entar" e0hibits.
Such dis!issal +as proper, plaintiff havin- no cause of action, since it +as dul"
established in the record that the application for re-istration of the land in =uestion filed
b" rancisco Militante, plaintiffCs vendor and predecessor interest, had been dis!issed
b" decision of %&:7 of the land re-istration court as affir!ed b" final /ud-!ent in %&:' of
the Court of )ppeals and hence, there +as no title or ri-ht to the land that could be
trans!itted b" the purported sale to plaintiff.
)s late as %&(;, the Iloilo court of first instance had in another case of e/ect!ent
li.e+ise upheld b" final /ud-!ent defendantCs 9better ri-ht to possess the land in
=uestion . havin- been in the actual possession thereof under a clai! of title !an" "ears
before rancisco Militante sold the land to the plaintiff.9
urther!ore, even assu!in- that Militante had an"thin- to sell, the deed of sale
e0ecuted in %&:( b" hi! in favor of plaintiff at a ti!e +hen plaintiff +as concededl" his
counsel of record in the land re-istration case involvin- the ver" land in dispute
*ulti!atel" decided adversel" a-ainst Militante b" the Court of )ppealsC %&:' /ud-!ent
affir!in- the lo+er courtCs dis!issal of MilitanteCs application for re-istration, +as
properl" declared ine0istent and void b" the lo+er court, as decreed b" )rticle %;$& in
relation to )rticle %;&% of the Civil Code.
1he appellate court, in its resolution of certification of 7: 4ul" %&87, -ave the follo+in-
bac.-rounder of the appeal at bar2
On )u-ust #%, %&(;, plaintiff Do!in-o D. Rubias, a la+"er, filed a suit to recover the
o+nership and possession of certain portions of lot under Psu5&&8&% located in 3arrio
<eneral Buna, 3arotac Vie/o, Iloilo +hich he bou-ht fro! his father5in5la+, rancisco
Militante in %&:( a-ainst its present occupant defendant, Isaias 3atiller, +ho ille-all"
entered said portions of the lot on t+o occasions L in %&;: and in %&:&. Plaintiff pra"ed
also for da!a-es and attorne"s fees. *pp. %58, Record on )ppeal,. In his ans+er +ith
counter5clai! defendant clai!s the co!plaint of the plaintiff does not state a cause of
action, the truth of the !atter bein- that he and his predecessors5in5interest have al+a"s
been in actual, open and continuous possession since ti!e i!!e!orial under clai! of
o+nership of the portions of the lot in =uestion and for the alle-ed !alicious institution of
the co!plaint he clai!s he has suffered !oral da!a-es in the a!ount of P 7,$$$.$$, as
+ell as the su! of P:$$.$$ for attorne"Cs fees. ...
On Dece!ber &, %&(;, the trial court issued a pre5trial order, after a pre5trial conference
bet+een the parties and their counsel +hich order reads as follo+s..
C@hen this case +as called for a pre5trial conference toda", the plaintiff appeared
assisted b" hi!self and )tt". <re-orio M. Rubias. 1he defendant also appeared,
assisted b" his counsel )tt". Vicente R. )csa".
). Durin- the pre5trial conference, the parties have a-reed that the following facts are
attendant in this case and that the" +ill no lon-er introduced an" evidence, testi!onial
or docu!entar" to prove the!2
%. 1hat rancisco Militante clai!ed o+nership of a parcel of land located in the 3arrio of
<eneral Buna, !unicipalit" of 3arotac Vie/o province of Iloilo, +hich he caused to be
surve"ed on 4ul" %'5#%, %&#;, +hereb" he +as issued a plan Psu5&&8&% *E0hibit 939,.
*1he land clai!ed contained an area of %8%2#:(% hectares.,
7. 3efore the +ar +ith 4apan, rancisco Militante filed +ith the Court of irst Instance of
Iloilo an application for the re-istration of the title of the land technicall" described in
psu5&&8&% *E0h. 939,opposed by t%e ,irector of Lands, t%e ,irector of -orestry and
ot%er oppositors. Ao+ever, durin- the +ar +ith 4apan, the record of the case +as lost
before it +as heard, so after the +ar rancisco Militante petitioned this court to
reconstitute the record of the case. 1he record was reconstituted on the Court of the
irst Instance of Iloilo and doc.eted as Land Case No. R"./0, *LRO Rec. No. 01203.
1he Court of irst Instance heard the land re-istration case on Nove!ber %;, %&:7,
and after t%e trial t%is court dis4issed t%e application for registration. 1he appellant,
rancisco Militante, appealed fro! the decision of this Court to the Court of )ppeals
+here the case +as doc.eted as C)5<R No. %#;&85R..
#. 'ending t%e disposal of t%e appeal in C)5<R No. %#;&85R and !ore particularl"
on June )2, )/0., -rancisco !ilitante sold to t%e plaintiff, ,o4ingo Rubias t%e
land technicall" described in psu5&&8&% *E0h. 9)9,. 1he sale +as dul" recorded in the
Office of the Re-ister of Deeds for the province of Iloilo as Entr" No. %#($& on 4ul" %%,
%&($ *E0h. 9)5%9,.
10
*NO1E2 )s per deed of sale, E0h. ), +hat Militante purportedl" sold to plaintiff5appellant,
his son5in5la+, for t%e su4 of '3,555.55 +as 9a parcel of untitled land havin- an area Of
%;;.&$87 hectares ... surve"ed under Psu &&8&% ... *and, sub/ect to the e0clusions
!ade b" !e, under *case, CA"i61/7, Land Registration Case No. R"./0, *.L.R.O. No.
01203, Court of irst Instance of the province of Iloilo. 1hese e0clusions referred to
portions of the ori-inal area of over %8% hectares ori-inall" clai!ed b" Militante as
applicant, but +hich he e0pressl" reco-ni6ed durin- the trial to pertain to so!e
oppositors, such as the 3ureau of Public @or.s and 3ureau of orestr" and several
other individual occupants and accordin-l" +ithdre+ his application over the sa!e. 1his
is e0pressl" !ade of record in E0h. ), +hich is the Court of Appeals8 decision of 33
epte4ber )/02 confir4ing the land re-istration courtCs dis4issal of MilitanteCs
application for re-istration.,
;. On Septe!ber 77,%&:' the Court of appeals in C)5<.R. No. %#;&85R pro!ul-ated its
/ud-!ent confir!in- the decision of this Court in Band Case No. R5(&:, <BRO Rec. No.
:;':7 +hich dis!issed the application for Re-istration filed b" rancisco Militante *E0h.
9I9,.
:. Do!in-o Rubias declared the land described in E0h. C3C for ta0ation purposes under
1a0 Dec. No. ':': *E0h. 9C9, for %&:8E 1a0 Dec. Nos. &:## *E0h. 9C5%9, and %$$%&
*E0h. 9C5#9,for the "ear %&(%E 1a0 Dec. No. &'(' *E0h. 9C579, for the "ear %&(;, pa"in-
the land ta0es under 1a0 Dec. No. ':': and &:## *E0h. 9D9, 9D5%9, 9<5(9,.
(. rancisco Militante i!!ediate predecessor5in5interest of the plaintiff, has also
declared the land for ta0ation purposes under 1a0 Dec. No. :%87 in %&;$ *E0h. 9E9, for
%&;:E under 1a0 Dec. No. 15'( *E0h. 9E5%9, for %&;'E under 1a0 Dec. No. 8%77 *E0h.
979,, and paid the land ta0es for %&;$ *E0hs. 9<9 and 9<589,, for %&;: ;( *E0h. 9<5%9, for
%&;8 *E0h. 9<579,, for %&;8 J %&;' *E0h. 9<5#9,, for %&;' *E0h. 9<5;9,, and for %&;' and
%&;& *E0h. 9<5:9,.
8. 1a0 Declaration No. 7;#; in the na!e of Biberato De!ontaMo for the land described
therein *E0h. 99, +as cancelled b" 1a0. Dec. No. :%87 of rancisco Militante *E0h. 9E9,.
Biberato De!ontaMo paid the land ta0 under 1a0 Dec. No. 7;#; on Dec. 7$, %&#& for the
"ears %&#' *:$N, and %&:& *E0h. 9A9,.
'. 1he defendant had declared for ta0ation purposes Bot No. 7 of the Psu5%::7;% under
1a0 Dec. Not. ':'# for %&:8 and a portion of Bot No. 7, Psu5%::7;%, for %&;: under 1a0
Dec. No. ':'; *E0h. 975)9 1a0 No. ':'# *E0h. 979, +as revised b" 1a0 Dec. No. &;&' in
the na!e of the defendant *E0h. 97539, and 1a0 Dec. No. ':'; *E0h. 975)9, +as
cancelled b" 1a0 Dec. No. &:'; also in the na!e of the defendant *E0h. 975C9,. 1he
defendant paid the land ta0es for Bot 7, Psu5%::7;%, on Nov. &, %&($ for the "ears %&;:
and %&;(, for the "ear %&:$, and for the "ear %&($ as sho+n b" the certificate of the
treasurer *E0h. 9#9,. 1he defendant !a" present to the Court other land ta0es receipts
for the pa"!ent of ta0es for this lot.
&. 1he land clai4ed by t%e defendant as his o+n +as surve"ed on 4une ( and 8,%&:(,
and a planapproved by ,irector of Land on Nove4ber )0, )/0. +as issued, identified
as 'su )0031) $9:%. ;0;&.
%$. On )pril 77, %&($, the plaintiff filed forcible 9ntry and ,etainer case a-ainst Isaias
3atiller in the 4ustice of the Peace Court of 3arotac Vie/o Province of Iloilo *E0h. 9;9, to
+hich the defendant Isaias 3atiller riled his ans+er on )u-ust 7&, %&($ *E0h. 9;5)9,.
1he !unicipal Court of 3arotac Vie/o after trial, decided t%e case on !ay )5, )/.) in
favor of t%e defendant and against t%e plaintiff *E0h. 9;539,. 1he plaintiff appealed fro!
the decision of the Municipal Court of 3arotac Vie/o +hich +as doc.eted in this Court as
Civil Case No. :8:$ on 4une #, %&(%, to +hich the defendant, Isaias 3atiller, on 4une
%#, %&(% filed his ans+er *E0h. 9;5C9,. )nd t%is Court after t%e trial. decided t%e case on
Nove4ber 3., )/.1, in favor of t%e defendant, <saias =atiller and a-ainst the plaintiff
*E0h. 9;5D9,.
*NO1E2 )s per E0h. ;53, +hich is the Iloilo court of first instance decision of 7(
Nove!ber %&(;dis4issing plaintiffCs therein co!plaint for e/ect!ent a-ainst defendant,
the iloilo court e0pressl" found 9that plaintiffCs co!plaint is un>ustified, intended to %arass
t%e defendant9 and 9that the defendant, Isaias 3atiller, has a better rig%t to possess the
land in =uestion described in Psu %::7;% *E0h. 9#9,, Isaias 3atiller havin- been in
the actual p%ysical possession thereof under a clai4 of title 4any years before
-rancisco !ilitante sold t%e land to t%e plaintiff"%ereby dis4issing plaintiff8s co!plaint
and orderin- the plaintiff to pa" the defendant attorne"Cs fees ....9,
3. Durin- the trial of this case on the !erit, the plaintiff +ill prove b" co!petent evidence
the follo+in-2
%. 1hat the land he purchased fro! rancisco Militante under E0h. 9)9 +as for!erl"
o+ned and possessed b" Biberato De!ontaMo but that on Septe!ber (, %&%& the land
+as sold at public auction b" virtue of a /ud-!ent in a Civil Case entitled ;9dw J.
'flieder plaintiff vs. Liberato ,e4onta?o -rancisco =alladeros and *regorio Yulo,
defendants;, of +hich >ap Pon-co +as the purchaser *E0h. 9%5#9,. 1he sale +as
re-istered in the Office of the Re-ister of Deeds of Iloilo on )u-ust ;, %&7$, under
Pri!ar" Entr" No. (& *E0h. 9%9,, and a definite Deed of Sale +as e0ecuted b"
Constantino ). Canto, provincial Sheriff of Iloilo, on 4an. %&, %&#; in favor of >ap
Pon-co *E0h. 9I9,, the sale havin- been re-istered in the Office of the Re-ister of Deeds
of Iloilo on ebruar" %$, %&#; *E0h. 9%5%9,.
7. On Septe!ber 77, %&#;, >ap Pon-co sold this land to rancisco Militante as
evidenced b" a notarial deed *E0h. 949, +hich +as re-istered in the Re-istr" of Deeds on
Ma" %#, %&;$ *E0h. 945%9,.
#. 1hat plaintiff suffered da!a-es alle-ed in his co!plaint.
C. Defendants, on the other hand +ill prove b" co!petent evidence durin- the trial of
this case the follo+in- facts2
11
%. 1hat lot No. 7 of the Psu5%::7 it *E0h. C:C, +as ori-inall" o+ned and possessed b"
elipe 3atiller, -randfather of the defendant 3asilio 3atiller, on the death of the for!er in
%&7$, as his sole heir. Isaias 3atiller succeeded his father , 3asilio 3atiller, in the
o+nership and possession of the land in the "ear %&#$, and since then up to the
present, the land re!ains in the possession of the defendant, his possession bein-
actual, open, public, peaceful and continuous in the concept of an o+ner, e0clusive of
an" other ri-hts and adverse to all other clai!ants.
7. 1hat the alle-ed predecessors in interest of the plaintiff have never been in the actual
possession of the land and that the" never had an" title thereto.
#. 1hat Bot No. 7, Psu %::7;%, the sub/ect of -ree 'atent application of t%e
defendant has beenapproved.
;. 1he da!a-es suffered b" the defendant, as alle-ed in his counterclai!.9C
1
1he appellate court further related the develop!ents of the case, as follo+s2
On )u-ust %8, %&(:, defendantCs counsel !anifested in open court that before an" trial
on the !erit of the case could proceed he +ould file a 4otion to dis4iss plaintiffCs
co!plaint +hich he did, alle-in- that plaintiff does not %ave cause of action against
%i4 because the propert" in dispute +hich he *plaintiff, alle-edl" bou-ht fro! his father5
in5la+, rancisco Militante +as the sub/ect !atter of BRC No. (&: filed in the CI of
Iloilo, +hich case +as brou-ht on appeal to this Court and doc.eted as C)5<.R. No.
%#;&85R in +hich aforesaid case plaintiff was t%e counsel on record of %is father5in5la+,
rancisco Militante. Invo.in- )rts. %;$& and %;&% of the Civil Code +hich reads2
C)rt. %;$&. 1he follo+in- contracts are ine0istent and void fro! the be-innin-2
000 000 000
*8, 1hose e0pressl" prohibited b" la+.
C)R1. %;&%. 1he follo+in- persons cannot ac=uire an" purchase, even at a public
auction, either in person of throu-h the !ediation of another2 .
000 000 000
*:, Justices, >udges, prosecuting attorneys, cler(s of superior and inferior courts, and
ot%er officers and e4ployees connected wit% t%e ad4inistration of >ustice, the propert"
and ri-hts of in liti-ation or levied upon an e0ecution before the court +ithin +hose
/urisdiction or territor" the" e0ercise their respective functionsE this prohibition includes
the act of ac=uirin- an assi-n!ent and shall appl" tolawyers, +ith respect to the
propert" and ri-hts +hich !a" be the ob/ect of an" liti-ation in +hich the" !a" ta.e part
b" virtue of their profession.C
defendant clai!s that plaintiff could not have ac=uired an" interest in the propert" in
dispute as the contract he *plaintiff, had +ith rancisco Militante +as ine0istent and void.
*See pp. 775#%, Record on )ppeal,. Plaintiff stron-l" opposed defendantCs !otion to
dis!iss clai!in- that defendant can not invo.e )rticles %;$& and %;&% of the Civil Code
as )rticle %;77 of the sa!e Code provides that C1he defense of ille-alit" of contracts is
not available to third persons +hose interests are not directl" affectedC *See pp. #75#:
Record on )ppeal,.
On October )2, )/.0, the lo+er court issued an order disclai4ing plaintiffs
co4plaint *pp. ;75;&, Record on )ppeal., In the aforesaid order of dis!issal the lo+er
court practicall" a-reed +ith defendantCs contention that the contract *E0h. ), bet+een
plaintiff and rancis! Militante +as null and void. In due season plaintiff filed a !otion
for reconsideration *pp. :$5:( Record on )ppeal, +hich +as denied b" the lo+er court
on 4anuar" %;, %&(( *p. :8, Record on )ppeal,.
Aence, this appeal b" plaintiff fro! the orders of October %', %&(: and 4anuar" %;,
%&((.
Plaintiff5appellant i!putes to the lo+er court the follo+in- errors2
C%. 1he lo+er court erred in holdin- that the contract of sale bet+een the plaintiff5
appellant and his father5in5la+, rancisco Militante, Sr., no+ deceased, of the propert"
covered b" Plan Psu5&&8&%, *E0h. 9)9, +as void, not voidable because it +as !ade
+hen plaintiff5appellant +as the counsel of the latter in the Band Re-istration case.
C7. 1he lo+er court erred in holdin- that the defendant5appellee is an interested person
to =uestion the validit" of the contract of sale bet+een plaintiff5appellant and the
deceased, rancisco Militante, Sr.
C#. 1he lo+er court erred in entertainin- the !otion to dis!iss of the defendant5appellee
after he had alread" filed his ans+er, and after the ter!ination of the pre5trial, +hen the
said !otion to dis!iss raised a collateral =uestion.
C;. 1he lo+er court erred in dis!issin- the co!plaint of the plaintiff5appellant.C
1he appellate court concluded that plaintiffs 9assi-n!ent of errors -ives rise to t+o *7,
le-al posers L *%, +hether or not the contract of sale bet+een appellant and his father5
in5la+, the late rancisco Militante over the propert" sub/ect of Plan Psu5&&8&% +as void
because it +as !ade +hen plaintiff +as counsel of his father5in5la+ in a land re-istration
case involvin- the propert" in disputeE and *7, +hether or not the lo+er court +as correct
in entertainin- defendant5appelleeCs !otion to dis!iss after the latter had alread" filed
his ans+er and after he *defendant, and plaintiff5appellant had a-reed on so!e !atters
in a pre5trial conference. Aence, its elevation of the appeal to this Court as involvin-
pure =uestions of la+.
12
It is at once evident fro! the fore-oin- narration that the pre5trial conference held b" the
trial court at +hich the parties +ith their counsel a-reed and stipulated on the !aterial
and relevant facts and sub!itted their respective docu!entar" e0hibits as referred to in
the pre5trial order, supra,
+
practicall" a!ounted to a fulldress trial +hich placed on
record all the facts and e0hibits necessar" for ad/udication of the case.
1he three points on +hich plaintiff reserved the presentation of evidence at the5trial
dealin- +ith the source of the alle-ed ri-ht and title of rancisco MilitanteCs
predecessors, supra,
3
actuall" are alread" !ade of record in thestipulated
facts and ad4itted e:%ibits. 1he chain of MilitanteCs alle-ed title and ri-ht to the land as
supposedl" traced bac. to Biberato De!ontaMo +as actually asserted b" Militante *and
his vendee, la+"er and son5in5la+, herein plaintiff, in the land re-istration case
and re>ected b" the Iloilo land re-istration court +hich dis4issedMilitanteCs application
for re-istration of the land. Such dis!issal, as alread" stated, +as affir!ed b" the final
/ud-!ent in %&:' of the Court of )ppeals.
,
1he four points on +hich defendant on his part reserved the presentation of evidence at
the trial dealin- +ith his and his ancestorsC continuous, open, public and peaceful
possession in the concept of o+ner of the land and the Director of BandsC approval of his
surve" plan thereof, supra,
5
are li.e+ise alread" dul" established facts of record, in the
land re-istration case as +ell as in the e/ect!ent case +herein the Iloilo court of first
instance reco-ni6ed the superiorit" of defendantCs ri-ht to the land as a-ainst plaintiff.
No error +as therefore co!!itted b" the lo+er court in dis!issin- plaintiffCs co!plaint
upon defendantCs !otion after the pre5trial.
%. 1he stipulated facts and e0hibits of record indisputabl" established plaintiffCs lac. of
cause of action and /ustified the outri-ht dis!issal of the co!plaint. PlaintiffCs clai! of
o+nership to the land in =uestion +as predicated on the sale thereof for P7,$$$.$$
!ade in %&:( b" his father5in5 la+, rancisco Militante, in his favor, at a ti!e +hen
MilitanteCs application for re-istration thereof had alread" been dis4issed b" the Iloilo
land re-istration court and +as pendin- appeal in the Court of )ppeals.
@ith the Court of )ppealsC %&:' final /ud-!ent affir!in- the dis4issal of MilitanteCs
application for re-istration, the lac. of an" ri-htful clai! or title of Militante to the land
+as conclusivel" and decisivel" /udiciall" deter!ined. Aence, there +as no rig%t or
title to the land that could be transferred or sold b" MilitanteCs purported sale in %&:( in
favor of plaintiff.
Manifestl", then plaintiffCs co!plaint a-ainst defendant, to be declared absolute o+ner of
the land and to be restored to possession thereof +ith da!a-es +as bereft of an"
factual or le-al basis.
7. No error could be attributed either to the lo+er courtCs holdin- that the purchase b" a
la+"er of the propert" in liti-ation fro! his client is cate-oricall" prohibited b" )rticle
%;&%, para-raph *:, of the Philippine Civil Code, reproduced supraE
6
and that
conse=uentl", plaintiffCs purchase of the propert" in liti-ation fro! his client *assu!in-
that his client could sell the sa!e since as alread" sho+n above, his clientCs clai! to the
propert" +as defeated and re/ected, +as void and could produce no le-al effect, b"
virtue of )rticle %;$&, para-raph *8, of our Civil Code +hich provides that contracts
9e0pressl" prohibited or declared void b" la+C are 9ine0istent and that 9*1,hese contracts
cannot be ratified. Neither can the ri-ht to set up the defense of ille-alit" be +aived.9
1he %&%% case of @olfson vs. 9state of !artineA
-
relied upon b" plaintiff as holdin- that
a sale of propert" in liti-ation to the part" liti-antCs la+"er 9is not void but voidable at the
election of the vendor9 +as correctl" held b" the lo+er court to have been superseded
b" the later %&7& case of ,irector of Lands vs. Abagat.
8
In this later case of )ba-at, the
Court e0pressl" cited t+o antecedent cases involvin- the sa!e transaction of purchase
of propert" in liti-ation b" the la+"er +hich +as e0pressl" declared invalid under )rticle
%;:& of the Civil Code of Spain *of +hich )rticle %;&% of our Civil Code of the
Philippines is the counterpart, upon challen-e thereof not b" the vendor5client but b" the
adverse parties a-ainst +ho! the la+"er +as to enforce his ri-hts as vendee thus
ac=uired.
1hese t+o antecedent cases thus cited in )ba-at clearl" superseded *+ithout so
e0pressl" statin- the previous rulin- in @olfson2
1he spouses, 4uan Soriano and Vicente Macarae-, +ere the o+ners of t+elve parcels of
land. Vicenta Macarae- died in Nove!ber, %&$&, leavin- a lar-e nu!ber of collateral
heirs but no descendants. Biti-ation bet+een the survivin- husband, 4uan Soriano, and
the heirs of Vicenta i!!ediatel" arose, and the herein appellant Sisenando Palarca
acted as SorianoCs la+"er. On Ma" 7, %&%', Soriano e0ecuted a deed for the aforesaid
t+elve parcels of land in favor of Sisenando Palarca and on the follo+in- da", Ma" #,
%&%', Palarca filed an application for the re-istration of the land in the deed. After
%earing, t%e Court of -irst <nstance declared t%at t%e deed was invalid by virtue of t%e
provisions of article )10/ of t%e Civil Code, w%ic% pro%ibits lawyers and solicitors fro4
purc%asing property rig%ts involved in any litigation in w%ic% t%ey ta(e part by virtue of
t%eir profession. B%e application for registration was consequently denied, and upon
appeal by 'alarca to t%e upre4e Court, t%e >udge4ent of t%e lower court was affir4ed
by a decision pro4ulgated Nove4ber ).,)/30. *<.R. No. 7;#7&, Palarca vs. Director of
Bands, not reported.,
In the !eanti!e cadastral case No. #$ of the Province of 1arlac +as instituted, and on
)u-ust 7%, %&7#, Eleuteria Macarae-, as ad!inistratri0 of the estate of Vicente
Macarae-, filed clai!s for the parcels in =uestion. 3uenaventura Bavitoria ad!inistrator
of the estate of 4uan Soriano, did li.e+ise and so did Sisenando Palarca. In a decision
dated 4une 7%, %&78, the Court of irst Instance, 4ud-e Carballo presidin-, rendered
/ud-!ent in favor of Palarea and ordered the re-istration of the land in his na!e. Cpon
appeal to t%is court by t%e ad4inistration of t%e estates of Juan oriano and +icente
!acaraeg, t%e >udg4ent of t%e court below was reversed and t%e land ad>udicated to
t%e two estates as con>ugal property of t%e deceased spouses. *<.R. No. 7'77(,
Director of Bands vs. )ba-at, pro!ul-ated Ma" 7%, %&7', not reported.,
9
13
In the ver" case of Abagat itself, the Court, a-ain affir!in- the invalidit" and nullit" of the
la+"erCs purchase of the land in liti-ation fro! his client, ordered the issuance of a +rit of
possession for the return of the land b" the la+"er to the adverse parties +ithout
rei!burse!ent of the price paid b" hi! and other e0penses, and ruled that 9the
appellant Palarca is a la+"er and is presu!ed to .no+ the la+. Ae !ust, therefore, fro!
the be-innin-, have been +ell a+are of the defect in his title and is, conse=uentl", a
possessor in bad faith.9
)s alread" stated, @olfson and Abagat +ere decided +ith relation to )rticle %;:& of the
Civil Code of Spain then adopted here, until it +as superseded on )u-ust #$, %&:$ b"
the Civil Code of the Philippines +hose counterpart provision is )rticle %;&%.
)rticle %;&% of our Civil Code *li.e )rticle %;:& of the Spanish Civil Code, prohibits in its
si0 para-raphs certain persons, b" reason of the relation of trust or their peculiar control
over the propert", fro! ac=uirin- such propert" in their trust or control either directl" or
indirectl" and 9even at a public or /udicial auction,9 as follo+s2 *%, -uardiansE *7, a-entsE
*#, ad!inistratorsE *;, public officers and e!plo"eesE /udicial officers and e!plo"ees,
prosecutin- attorne"s, and la+"ersE and *(, others especiall" dis=ualified b" la+.
In @olfson +hich involved the sale and assi-n!ent of a !one" /ud-!ent b" the client to
the la+"er, @olfson, +hose ri-ht to so purchase the /ud-!ent +as bein- challen-ed b"
the /ud-!ent debtor, the Court, throu-h 4ustice Moreland, then e0pressl" reserved
decision on 9+hether or not the /ud-!ent in =uestion actuall" falls +ithin the prohibition
of the article9 and held onl" that the saleCs 9voidabilit" can not be asserted b" one not a
part" to the transaction or his representative,9 citin- fro! Manresa
10
that 9*C,onsiderin-
the =uestion fro! the point of vie+ of the civil la+, the vie+ ta.en b" the code, +e !ust
li!it ourselves to classif"in- as void all acts done contrar" to the e0press prohibition of
the statute. No+ then2 )s the code does not reco-ni6e such nullit" b" the !ere
operation of la+, the nullit" of the acts hereinbefore referred to !ust be asserted b" the
person havin- the necessar" le-al capacit" to do so and decreed b" a co!petent
court.9
11
1he reason thus -iven b" Manresa in considerin- such prohibited ac=uisitions under
)rticle %;:& of the Spanish Civil Code as !erel" voidable at the instance and option of
the vendor and not void L 9that the Code does not reco-ni6e such nullit" de pleno
derec%o9 L is no lon-er true and applicable to our o+n Philippine Civil Code
+hichdoes reco-ni6e the absolute nullit" of contracts 9+hose cause, ob/ect, or purpose
is contrar" to la+, !orals, -ood custo!s, public order or public policy9 or +hich are
9e:pressly pro%ibited or declared void by law9 and declares such contracts 9ine:istent
and void fro4 t%e beginning.9
1+
1he Supre!e Court of Spain and !odern authors have li.e+ise veered fro! ManresaCs
vie+ of the Spanish codal provision itself. In its sentencia of %% 4une %&((, the Supre!e
Court of Spain ruled that the prohibition of )rticle %;:& of the Spanish Civil Code is
based on public polic", that violation of the prohibition contract cannot be validated b"
confir!ation or ratification, holdin- that2
... la prohibicion =ue el articulo %;:& del C.C. establece respecto a los ad!inistradores "
apoderados, la cual tiene confor!e a la doctrina de esta Sala, contendia entre otras, en
S. de 785:5%&:&, un funda!ento de orden 4oral lugar la violacion de esta a la nulidad
de pleno derec%o del acto o ne-ocio celebrado, ... " prohibicion le-al, afectante orden
publico, no cabe con efecto al-uno la aludida retification ...
13
1he criterion of nullit" of such prohibited contracts under )rticle %;:& of the Spanish
Civil Code *)rticle %;&% of our Civil Code, as a !atter of public order and polic" as
applied b" the Supre!e Court of Spain to ad!inistrators and a-ents in its above cited
decision should certainl" appl" +ith -reater reason to /ud-es, /udicial officers, fiscals and
la+"ers under para-raph : of the codal article.
Citin- the sa!e decisions of the Supre!e Court of Spain, <ullon 3allesteros, his 9Curso
de Derecho Civil, *Contratos Especiales,9 *Madrid, %&(', p. %', affir!s that, +ith respect
to )rticle %;:&, Spanish Civil Code2.
Fue caracter tendra la co!pra =ue se realice por estas personasK Porsupuesto no cabe
duda de =ue el caso *art., %;:&, ;$ " :$, la nulidad esabsoluta por=ue el !otivo de la
prohibicion es de orden publico.
1,
Pere6 <on6ales in such vie+, statin- that 9Dado el caracter prohibitivo delprecepto, la
conse=uencia de la infraccion es la nulidad radical " e0 le-e.9
15
Castan, =uotin- ManresaCs o+n observation that.
9El funda!ento do esta prohibicion es clarisi!o. No sa trata con este precepto tan solo
de -uitar la ocasion al fraudeE persi-uese, ade!asel proposito de rodear a las personas
que intervienen en la ad4inistrcionde >usticia de todos los retigios que necesitan pora
e>ercer su 4inisterio librandolos de toda suspec%a, que aunque fuere in fundada,
redundura endescredito de la institucion.9
16
arrives at the contrar" and no+ accepted
vie+ that 9Puede considerace en nuestro derecho ine:istente 8o radical4ente nulo el
contrato en los si-uentes cases2 a, ...E b, cuando el contrato se ha celebrado en
violacion de una prescripcion 8o pro%ibicion legal, fundada sobre 4otivos de orden
publico *hipotesis del art. ; del codi-o, ...9
1-
It is note+orth" that CaltanCs rationale for his conclusion that funda!ental consideration
of public polic" render void and ine0istent such e0pressl" prohibited purchase *e.-. b"
public officers and e!plo"ees of -overn!ent propert" intrusted to the! and b" /ustices,
/ud-es, fiscals and la+"ers of propert" and ri-hts in liti-ation and sub!itted to or
handled b" the!, under )rticle %;&%, para-raphs *;, and *:, of our Civil Code, has been
adopted in a ne+ article of our Civil Code, vi6, )rticle %;$& declarin- such prohibited
contracts as 9ine:istent and void fro4 t%e beginning.9
18
Indeed, the nullit" of such prohibited contracts is definite and per!anent and cannot be
cured b" ratification. 1he public interest and public polic" re!ain para!ount and do not
per!it of co!pro!ise or ratification. In his aspect, the per!anent dis=ualification of
14
public and /udicial officers and la+"ers -rounded on public policy differs fro! the first
three cases of -uardians, a-ents and ad!inistrators *)rticle %;&%, Civil Code,, as to
+hose transactions it had been opined that the" !a" be 9ratified9 b" !eans of and in
9the for! of a ne+ contact, in +hich cases its validit" shall be deter!ined onl" b" the
circu!stances at the ti!e the e0ecution of such ne+ contract. 1he causes of nullit"
+hich have ceased to e0ist cannot i!pair the validit" of the ne+ contract. 1hus, the
ob/ect +hich +as ille-al at the ti!e of the first contract, !a" have alread" beco!e la+ful
at the ti!e of the ratification or second contractE or the service +hich +as i!possible
!a" have beco!e possibleE or the intention +hich could not be ascertained !a" have
been clarified b" the parties. 1he ratification or second contract +ould then be valid fro4
its e:ecutionE ho+ever, it does not retroact to the date of the first contract.9
19
)s applied to the case at bar, the lo+er court therefore properl" acted upon defendant5
appellantCs O!$%otion to dis!iss on the -round of nullit" of plaintiffCs alle-ed purchase of
the land, since its /uridical effects and plaintiffCs alle-ed cause of action founded thereon
+ere bein- asserted a-ainst defendant5appellant. 1he principles -overnin- the nullit" of
such prohibited contracts and /udicial declaration of their nullit" have been +ell restated
b" 1olentino in his treatise on our Civil Code, as follo+s2
Parties )ffected. L Any person !a" invo.e the in e:istence of the contract +henever
/uridical effects founded thereon are asserted a-ainst hi!. 1hus, if there has been a void
transfer of propert", the transferor can recover it b" the accion reinvindicatoriaE and an"
prossessor !a" refuse to deliver it to the transferee, +ho cannot enforce the contract.
Creditors !a" attach propert" of the debtor +hich has been alienated b" the latter under
a void contractE a !ort-a-ee can alle-e the ine0istence of a prior encu!branceE a
debtor can assert the nullit" of an assi-n!ent of credit as a defense to an action b" the
assi-nee.
)ction On Contract. L Even +hen the contract is void or ine0istent, an action is
necessar" to declare its ine0istence, +hen it has alread" been fulfilled. Nobod" can ta.e
the la+ into his o+n handsE hence, the intervention of the co!petent court is necessar"
to declare the absolute nullit" of the contract and to decree the restitution of +hat has
been -iven under it. 1he /ud-!ent, ho+ever, +ill retroact to the ver" da" +hen the
contract +as entered into.
If the void contract is still full" e0ecutor", no part" need brin- an action to declare its
nullit"E but if an" part" should brin- an action to enforce it, the other part" can si!pl" set
up the nullit" as a defense.
+0
)CCORDIN<B>, the order of dis!issal appealed fro! is hereb" affir!ed, +ith costs in
all instances a-ainst plaintiff5appellant. So ordered.
!a(alintal, Daldivar, Castro,. -ernando, =arredo, !a(asiar, Antonio and 9sguerra, JJ.,
concur.
15
Republic of the Philippines
SUPREME COURT
Manila
1AIRD DIVISION
G.R. No. 1595-8 *.5/ +8, +008
ROGEL# "#CL#G %&' #"ELNO "#CL#G 7'e8e%1e'9 S.b1t2t.te' b/ RO"EL M.
"#CL#G %&' #"R#N M. "#CL#G, Petitioners,
vs.
ELNO M#C#$LG, #"EL# M#C#$LG CONR#"O M#C#$LG, LOREN0#
$#(ER %&' (ENT# "EL ROS#RO, Respondents.
D E C I S I O N
#USTR#-M#RTNE0, J.:
3efore us is a Petition for Revie+ on Certiorari under Rule ;: of the Rules of Court
see.in- to annul and set aside the Decision
%
dated October %8, 7$$% and the
Resolution
7
dated )u-ust 8, 7$$# of the Court of )ppeals *C), in C) <.R. CV No.
;';&'.
1he antecedent facts2
Durin- their lifeti!e, the spouses Candido and <re-oria Macahili- +ere the o+ners of
seven parcels of land, all located in Nu!ancia, ).lan. 1he" had seven children, na!el"2
Dionesio, E!eliano, Mario, I-nacio, Eusebio, 1arcela and Ma0i!a.
On March %', %&'7, Ma0i!a, a dau-hter of Candido and <re-oria entered into a Deed
of E0tra5/udicial Partition
#
+ith the heirs of her deceased brothers, Mario and Eusebio
Macahili-, over the seven parcels of land. 1he sa!e deed stated that Dionesio +as
alread" deceased but +as survived b" his dau-hter, Susana 3rionesE E!eliano +as out
of the countr"E I-nacio and 1arcela +ere also both deceased but +ere survived b" three
children each.
One of the properties partitioned in the Deed +as a parcel of irri-ated riceland located at
Poblacion, Nu!ancia, ).lan, +ith an area of %,'&( s=uare !eters declared in the na!e
of Ma0i!a under 1a0 Declaration No. (;; +hich +as deno!inated as 9Parcel One.9
1his Parcel One +as divided bet+een Vicenta Macahili- <alve6 for the heirs of Mario
Macahili-, +ho +as -iven the one half southern portion of the landE and )dela Macahili-
for the heirs of Eusebio Macahili-, +ho -ot the one half northern portion. 1he Deed +as
notari6ed b" Municipal 4ud-e rancisco M. Dreta in his capacit" as e:"officio notar"
public. 1he heirs of Eusebio Macahili- are the herein respondents.
On March %&, %&'7, Ma0i!a e0ecuted a State!ent of Confor!it"
;
in +hich she
confir!ed the e0ecution of the Deed of E0tra5/udicial Partition and confor!ed to the
!anner of partition and ad/udication !ade therein. She also attested that five parcels of
land in the deed +ere declared in her na!e for ta0ation purposes, althou-h said lands
+ere actuall" the propert" of her deceased parents Candido and <re-oria Macahili-E
that she +aived, renounced and relin=uished all her ri-hts to the land ad/udicated to all
her co5heirs in the deedE and that she had alread" sold one parcel before the deed +as
e0ecuted, +hich +as considered as her advance share. Pedro Divison, Ma0i!aCs
husband, also affi0ed his si-nature to the State!ent of Confor!it".
On Ma" 7#, %&';, Ma0i!a sold Parcel One to spouses )delino and Ro-elia Dacla-
*petitioners, as evidenced b" a Deed of Sale
:
.
On 4ul" %8, %&';, OC1 No. P5%#'8#
(
+as issued in the na!e of petitioner Ro-elia M.
Dacla- b" virtue of her free patent application.
On Dece!ber %(, %&&%, Elino Macahili-, )dela Macahili-, Conrado Macahili-, Boren6a
Aaber and 3enita del Rosario *respondents, filed +ith the Re-ional 1rial Court *R1C, of
Palibo, ).lan a co!plaint for recover" of possession and o+nership, cancellation of
docu!ents and da!a-es a-ainst Ma0i!a and petitioners, doc.eted as Civil Case No.
;##;.
Respondents alle-ed that the" +ere the la+ful o+ners and previous possessors of the
one half northern portion of Parcel One b" virtue of a Deed of E0tra5/udicial PartitionE
that since the" +ere all residents of Caloocan Cit", their land +as possessed b" their
first cousin, Penicula Divison Fui/ano, Ma0i!aCs dau-hter, as tenant thereon, as she
+as also in possession of the one half southern portion as tenant of the heirs of Mario
Macahili-E that so!eti!e in %&'#, upon re=uest of Ma0i!a and out of pit" for her as she
had no share in the produce of the land, Penicula allo+ed Ma0i!a to far! the landE that
+ithout their .no+led-e, Ma0i!a ille-all" sold on Ma" 7#, %&';, the entire riceland to
petitioners, +ho are no+ in possession of the land, deprivin- respondents of its annual
produce valued at P;,'$$.$$.
In their )ns+er +ith Cross5Clai!, petitioners contended that2 petitioner Ro-elia had
been the re-istered o+ner of the entire riceland since %&'; as evidenced b" OC1 No. P5
%#'8#E her title had beco!e incontrovertible after one "ear fro! its issuanceE the"
purchased the sub/ect land in -ood faith and for value fro! co5defendant Ma0i!a +ho
+as in actual ph"sical possession of the propert" and +ho delivered and conve"ed the
sa!e to the!E the" +ere no+ in possession and usufruct of the land since then up to the
presentE respondents +ere barred b" laches for the unreasonable dela" in filin- the
case. 1he" also filed a cross5clai! a-ainst Ma0i!a for +hatever char-es, penalties and
da!a-es that respondents !a" de!and fro! the!E and the" pra"ed that Ma0i!a be
ordered to pa" the! da!a-es for the fraud and !isrepresentation co!!itted a-ainst
the!.
16
Respondents subse=uentl" filed an )!ended Co!plaint, upon learnin- that petitioners
+ere issued OC1 No. %#'8# b" virtue of their free patent application, and as.ed for the
reconve"ence of the one half northern portion of the land covered b" such title.
1he land in =uestion +as deli!ited in the Co!!issionerCs Report and s.etch sub!itted
b" 3ernardo <. Sualo- as the one half northern portion, +hich had an area of %%8' s=.
!eters. 1he Report and the s.etch +ere approved b" the R1C on 4une 77, %&&%.
or failure of Ma0i!a to file an ans+er, the R1C declared her in default both in the
co!plaint and cross5clai! a-ainst her.
)fter trial, the R1C rendered its Decision
8
dated Nove!ber %', %&&;, the dispositive
portion of +hich reads2
@AEREORE, findin- preponderance of evidence in favor of plaintiffs HrespondentsI,
/ud-!ent is hereb" rendered as follo+s2
%. 1he deed of sale dated Ma" 7#, %&';, e0ecuted b" Ma0i!a Divison in favor of
)delino Dacla- and Ro-elia Dacla- before Notar" Public Ed-ar R. Peralta and doc.eted
in his notarial re-ister as Doc. No. %#8, Pa-e No. #$, 3oo. No. VII, Series of %&'; is
declared NDBB and VOIDE
7. 1he plaintiffs are hereb" declared the true and la+ful o+ners and entitled to the
possession of the northern one5half *%?7, portion of the land described under para-raph
7 of the a!ended co!plaint and desi-nated as E0hibit 95%9 in the co!!issionersG
s.etch +ith an area of %,%8' s=uare !etersE
#. 1he defendants5spouses )delino and Ro-elia Dacla- HpetitionersI are hereb" ordered
and directed to vacate the land described in the precedin- para-raph and restore and
deliver the possession thereof to the plaintiffsE
;. 1he defendants are ordered to e0ecute a deed of reconve"ance in favor of the
plaintiffs over the land described in para-raph 7 hereofE
:. 1he defendants are ordered, /ointl" and severall", to pa" the plaintiffs ten *%$, cavans
of pala" per annu! be-innin- the second croppin- of %&'; until the ti!e the possession
of the land in =uestion is restored to the plaintiffsE and
(. 1he defendants are ordered, /ointl" and severall", to pa" the plaintiffs reasonable
attorne"Gs fees in the a!ount of P#,$$$.$$ plus cost of the suit.
'
1he R1C found that respondents +ere able to establish that Parcel One +as divided
bet+een the heirs of Mario and the heirs of Eusebio, +ith the for!er -ettin- the one half
southern portion and the latter the one half northern portion e!bodied in a Deed of
E0tra5/udicial partition, +hich bore Ma0i!aCs thu!b!ar.sE that nobod" =uestioned the
DeedCs validit", and no evidence +as presented to prove that the docu!ent +as not
validl" and re-ularl" e0ecutedE that Ma0i!a also e0ecuted a dul" notari6ed State!ent of
Confor!it" dated March %&, %&'7 +ith the confor!it" of her husband, Pedro. 1he R1C
concluded that +hen Ma0i!a e0ecuted the Deed of Sale in favor of petitioners on Ma"
7#, %&';, Ma0i!a had no ri-ht to sell that land as it did not belon- to herE that she
conve"ed nothin- to petitionersE and that the deed of sale should be declared null and
void.
In disposin- the issue of +hether petitioners could be considered innocent purchasers
for value, the R1C ruled that petitioners could not even be considered purchasers, as
the" never ac=uired o+nership of the land since the sale to the! b" Ma0i!a +as voidE
and that petitionersC act of reflectin- onl" the price of P:,$$$.$$ in the Deed of Sale to
avoid pa"in- ta0es to the 3IR should be conde!ned for defraudin- the -overn!ent and
thus should not be -iven protection fro! the courts.
1he R1C further ruled that since petitioners +ere able to obtain a free patent on the
+hole land in petitioner Ro-eliaCs na!e, reconve"ance to respondents of the %,%8' s=.
!eter northern portion of the land +as /ust and properE that the respondents +ere
entitled to a share in the harvest at t+o croppin-s per "ear after deductin- the share of
the tenantE that since Ma0i!a died in October %&&#, +hatever char-es and clai!s
petitioners !a" recover fro! her e0pired +ith her.
)--rieved, petitioners filed their appeal +ith the C).
On October %8, 7$$%, the C) dis!issed the appeal and affir!ed the R1C decision.
1he C) ruled that since Ma0i!a had no ri-ht to sell the land as she +as not the ri-htful
o+ner thereof, nothin- +as conve"ed to petitionersE that a person +ho ac=uired propert"
fro! one +ho +as not the o+ner and had no ri-ht to dispose of the sa!e, obtained the
propert" +ithout ri-ht of title, and the real o+ner !a" recover the sa!e fro! hi!.
1he C) found that since respondents +ere una+are of the sale, it +as not a surprise
that the" did not =uestion petitionersC application for a free patent on the sub/ect landE
that the possession b" Ma0i!a of the sub/ect land did not vest o+nership in her, as her
possession +as not in the concept of an o+nerE and that petitioners +ere not purchasers
in -ood faith. It also found that the ri-ht to en/o" included the ri-ht to receive the produce
of the thin-E that respondents as true o+ners of the sub/ect land +ere deprived of their
propert" +hen Ma0i!a ille-all" sold it to petitionersE and thus, e=uit" de!anded that
respondents be -iven +hat ri-htfull" belon-ed to the! under the principle that a person
cannot enrich hi!self at the e0pense of another.
Aence, herein petition on the follo+in- -rounds2
). 1AE AONOR)3BE CODR1 O )PPE)BS COMMI11ED ) SERIODS ERROR
@AEN I1 DECB)RED 1A)1 AEREIN PE1I1IONERS A)D NO V)BID 1I1BE OVER
1AE B)ND IN FDES1ION.
17
3. 1AE AONOR)3BE CODR1 O )PPE)BS <R)VEB> ERRED IN AOBDIN< 1A)1
PE1I1IONERS )RE NO1 PDRCA)SERS OR 3D>ERS IN <OOD )I1A.
C. 1AE AONOR)3BE CODR1 O )PPE)BS <R)VEB> ERRED @AEN I1 )IRMED
1AE DECISION O 1AE BO@ER CODR1 IN ORDERIN< 1AE DEEND)N1S5
PE1I1IONERS 4OIN1B> )ND SEVER)BB> 1O P)> PER )NNDM 3E<INNIN< 1AE
SECOND CROPPIN< O %&'; DN1IB 1AE 1IME 1AE POSSESSION O 1AE B)ND
IN FDES1ION IS RES1ORED 1O 1AE PB)IN1IS HrespondentsI.
&
1he issues for resolution are *%, +hether Ma0i!a +as the previous o+ner of Parcel One,
+hich included respondentsC one half northern portion, no+ covered b" OC1 No. P5
%#'8#E 7, +hether petitioners could validl" invo.e the defense of purchasers in -ood
faithE and *#, +hether reconve"ance is the proper re!ed".
Preli!inaril", +e +ould li.e to state the inescapable fact that the E0tra5/udicial partition
of the estate of Candido Macahili- involvin- the seven parcels of land +as !ade onl"
bet+een Ma0i!a and the heirs of her t+o deceased brothers Mario and Eusebio.
Section % of Rule 8; of the Rules of Court provides2
Section %. 9:tra>udicial settle4ent by agree4ent between %eirs. 5 If the decedent left no
+ill and no debts and the heirs are all of a-e, or the !inors are represented b" their
/udicial or le-al representatives dul" authori6ed for the purpose, the parties !a", +ithout
securin- letters of ad!inistration, divide the estate a!on- the!selves as the" see fit b"
!eans of a public instru!ent filed in the office of the re-ister of deeds, and should the"
disa-ree, the" !a" do so in an ordinar" action for partition. 0 0 0
1he fact of the e0tra/udicial settle!ent or ad!inistration shall be published in a
ne+spaper of -eneral circulation in the !anner provided in the ne0t succeedin- sectionE
but no e0tra/udicial settle!ent shall be bindin- upon an" person +ho has not
participated therein or had no notice thereof.
Records do not sho+ that there has been an" case filed b" the other heirs +ho had not
participated in the Deed of E0tra5/udicial Partition and +ere =uestionin- the validit" of
such partition. 1hus, the resolution of the present case concerns onl" the issues
bet+een the parties before us and +ill not in an" +a" affect the ri-hts of the other heirs
+ho have not participated in the partition.
1he first t+o issues raised for resolution are factual. It is a settled rule that in the
e0ercise of the Supre!e CourtCs po+er of revie+, the Court is not a trier of facts and
does not nor!all" underta.e the re5e0a!ination of the evidence presented b" the
contendin- parties durin- the trial of the case, considerin- that the findin-s of facts of
the C) are conclusive and bindin- on the Court.
%$
@hile /urisprudence has reco-ni6ed
several e0ceptions in +hich factual issues !a" be resolved b" this Court, na!el"2 *%,
+hen the findin-s are -rounded entirel" on speculation, sur!ises or con/ecturesE *7,
+hen the inference !ade is !anifestl" !ista.en, absurd or i!possibleE *#, +hen there is
-rave abuse of discretionE *;, +hen the /ud-!ent is based on a !isapprehension of
factsE *:, +hen the findin-s of facts are conflictin-E *(, +hen in !a.in- its findin-s the
C) +ent be"ond the issues of the case, or its findin-s are contrar" to the ad!issions of
both the appellant and the appelleeE *8, +hen the findin-s are contrar" to those of the
trial courtE *', +hen the findin-s are conclusions +ithout citation of specific evidence on
+hich the" are basedE *&, +hen the facts set forth in the petition as +ell as in the
petitionerCs !ain and repl" briefs are not disputed b" the respondentE *%$, +hen the
findin-s of fact are pre!ised on the supposed absence of evidence and contradicted b"
the evidence on recordE and *%%, +hen the C) !anifestl" overloo.ed certain relevant
facts not disputed b" the parties, +hich, if properl" considered, could /ustif" a different
conclusion,
%%
none of these e0ceptions has been sho+n to appl" to the present case
and, hence, this Court !a" not revie+ the findin-s of fact !ade b" the lo+er courts.
@e find no co-ent reason to depart fro! the findin-s of both the trial court and the C)
that Ma0i!a +as not the o+ner of the land she sold to petitioners, and that the one half
northern portion of such land +as o+ned b" the respondentsE that Ma0i!a had no ri-ht
to dispose of the land and, thus, she had no ri-ht to conve" the sa!e.
1o repeat, records sho+ that Ma0i!a entered into a Deed of E0tra5/udicial Partition +ith
the heirs of her t+o deceased brothers, na!el"2 Mario and Eusebio, over seven parcels
of land o+ned b" Candido and <re-oria Macahili-. One of these lands +as the irri-ated
riceland +ith an area of %,'&( s=. !eters +hich, per the Deed of Partition, +as divided
bet+een the heirs of Mario and EusebioE and the for!er -ot the one half southern
portion, +hile the latter -ot the one half northern portion. Ma0i!a affi0ed her thu!b!ar.
to the Deed. 1his parcel of riceland +as sold b" Ma0i!a to petitioners. Ao+ever,
Ma0i!a, at the ti!e of the e0ecution of the Deed of Sale over this parcel of land in favor
of petitioner on Ma" 7#, %&';, had no ri-ht to sell the sa!e as she +as not the o+ner
thereof.
In fact, Ma0i!a, +ith the confor!it" of her husband Pedro, had even e0ecuted a
State!ent of Confor!it", in +hich she affir!ed the e0ecution of the Deed of E0tra5
/udicial Partition and confor!ed to the !anner of the partition of shares therein. She
attested to the fact that the five parcels of land sub/ect of the Deed of E0tra5/udicial
Partition, +hich +ere declared in her na!e under different ta0 declarations, +ere
actuall" properties of her deceased parentsE and that she +aived all her ri-hts over the
lands or portions thereof ad/udicated to all her co5heirs.
Neither Ma0i!a nor an" of her heirs ever =uestioned the validit" of these t+o above5
!entioned docu!ents to +hich she affi0ed her thu!b!ar.s. Notabl", +hen the instant
co!plaint +as filed b" respondents a-ainst Ma0i!a and petitioners in %&&%, in +hich
respondents clai!ed as basis of their o+nership of the one half northern portion of the
riceland +as the Deed of E0tra5/udicial Partition, Ma0i!a, +hile still livin- at that ti!e, as
she died in %&&#, never denied the sa!e. )s alread" stated, she failed to file an ans+er
and +as declared in default.
In a contract of sale, it is essential that the seller is the o+ner of the propert" he is
sellin-.
%7
Dnder )rticle %;:' of the Civil Code, the principal obli-ation of a seller is to
18
transfer the o+nership of the propert" sold.
%#
)lso, )rticle %;:& of the Civil Code
provides that the thin- !ust be licit and the vendor !ust have a ri-ht to transfer the
o+nership thereof at the ti!e it is delivered. Ma0i!aCs e0ecution of the Deed of Sale
sellin- Parcel One, part of +hich is respondentsC one half northern portion, +as not valid
and did not transfer o+nership of the land to petitioners, as Ma0i!a had no title or
interest to transfer. It is an established principle that no one can -ive +hat one does not
have 55 ne4o dat quod non %abet. )ccordin-l", one can sell onl" +hat one o+ns or is
authori6ed to sell, and the bu"er can ac=uire no !ore than +hat the seller can transfer
le-all".
%;
Petitioners insist that Ma0i!a o+ned the sub/ect land as sho+n b" her actual and
continuous possession of the sa!eE that it +as declared in her na!e for ta0ation
purposesE that throu-hout the ti!e that Ma0i!a and her children +ere in possession of
the propert", she never -ave an" share of the produce to respondentsE and that Ma0i!a
even !ort-a-ed the land to a ban..
@e are not persuaded.
Ma0i!aCs possession of the sub/ect land +as b" reason of her re=uest to her dau-hter
Penicula, +ho +as installed b" respondents as tenant after the e0ecution of the Deed of
E0tra5/udicial Partition, as Ma0i!a +anted to far! the land so that she could have a
share in the produce, to +hich Penicula acceded out of pit".
%:
It +as also established
that after the e0ecution of the Deed of E0tra5/udicial Partition, Penicula as tenant +as
able to far! the sub/ect land for one croppin- "ear before she allo+ed her !other
Ma0i!a to far! the land thereafterE and, at that ti!e, Penicula -ave the correspondin-
share of the produce of that one crop "ear to )dela,
%(
one of herein respondents, thus
establishin- respondentsC o+nership of the sub/ect land. Evidentl", Ma0i!aCs possession
of the land +as not in the concept of an o+ner.
@hile the land +as declared in Ma0i!aCs na!e for ta0ation purposes, it did not establish
Ma0i!aCs o+nership of the sa!e. @e have held that a ta0 declaration, b" itself, is not
considered conclusive evidence of o+nership.
%8
It is !erel" an indiciu! of a clai! of
o+nership.
%'
3ecause it does not b" itself -ive title, it is of little value in provin- oneCs
o+nership.
%&
PetitionersC reliance on Ma0i!aCs ta0 declaration in assu!in- that she
o+ned Parcel One is an erroneous assu!ption that should not pre/udice the ri-hts of the
real o+ners.
1he fact that a !ort-a-e +as constituted on the land +hile the sa!e +as in Ma0i!aCs
na!e +ould not !a.e Ma0i!a the o+ner thereof. Ma0i!aCs non5o+nership of Parcel
One +as clearl" established b" the Deed of E0tra5/udicial Partition and the State!ent of
Confor!it", +herein she cate-oricall" declared that the land +as actuall" o+ned b" her
deceased parents, to +hich she separatel" affi0ed her thu!b!ar.s. 3oth docu!ents
sho+ed declarations a-ainst her interest in the land. ) declaration a-ainst interest is the
best evidence +hich affords the -reatest certaint" of the facts in dispute.
7$
@hile petitioners +ere able to secure a certificate of title coverin- Parcel One in
petitioner Ro-eliaCs na!e, their possession of a certificate of title alone does not
necessaril" !a.e the! the true o+ners of the propert" described therein. Our land
re-istration la+s do not -ive the holder an" better title than +hat he actuall" has.
7%
In Naval v. Court of Appeals,
77
+e held2
Re-istration of a piece of land under the 1orrens S"ste! does not create or vest title,
because it is not a !ode of ac=uirin- o+nership. ) certificate of title is !erel" an
evidence of o+nership or title over the particular propert" described therein. It cannot be
used to protect a usurper fro! the true o+nerE nor can it be used as a shield for the
co!!ission of fraudE neither does it per!it one to enrich hi!self at the e0pense of
others. Its issuance in favor of a particular person does not foreclose the possibilit" that
the real propert" !a" be co5o+ned +ith persons not na!ed in the certificate, or that it
!a" be held in trust for another person b" the re-istered o+ner.
0 0 0 not+ithstandin- the indefeasibilit" of the 1orrens title, the re-istered o+ner !a" still
be co!pelled to reconve" the re-istered propert" to its true o+ners. 1he rationale for the
rule is that reconve"ance does not set aside or re5sub/ect to revie+ the findin-s of fact of
the 3ureau of Bands. In an action for reconve"ance, the decree of re-istration is
respected as incontrovertible. @hat is sou-ht instead is the transfer of the propert" or its
title +hich has been +ron-full" or erroneousl" re-istered in another personCs na!e, to its
ri-htful or le-al o+ner, or to the one +ith a better ri-ht.
7#
@e find that reconve"ance of the sub/ect land to respondents is proper. 1he essence of
an action for reconve"ance is that the free patent and certificate of title are respected as
incontrovertible. @hat is sou-ht is the transfer of the propert", +hich has been
+ron-full" or erroneousl" re-istered in another personCs na!e, to its ri-htful o+ner or to
one +ith a better ri-ht.
7;
Respondents have specificall" pra"ed that petitioners be ordered to restore and
reconve" to the! the sub/ect land. In an action for reconve"ance, the issue involved is
one of o+nershipE and for this purpose, evidence of title !a" be introduced.
Respondents had sufficientl" established that Parcel One, covered b" OC1 No. P5
%#'8#, of +hich respondentsC northern one half portion for!ed a part, +as not o+ned b"
Ma0i!a at the ti!e she sold the land to petitioners. @e have earlier discussed the
evidence presented b" respondents establishin- that Ma0i!a had no clai! of o+nership
over the land sold b" her to petitioners.
)n action for reconve"ance prescribes in %$ "ears, the point of reference bein- the date
of re-istration of the deed or the date of issuance of the certificate of title over the
propert".
7:
Records sho+ that +hile the land +as re-istered in the na!e of petitioner
Ro-elia in %&';, the instant co!plaint for reconve"ance +as filed b" the respondents in
%&&%, and +as thus still +ithin the ten5"ear prescriptive period.
Petitioners clai! that the" +ere innocent bu"ers in -ood faith and for valueE that there
+as no evidence sho+in- that the" +ere in bad faith +hen the" purchased the sub/ect
landE that )rticle :7( of the Civil Code provides that he is dee!ed a possessor in -ood
faith +ho is not a+are that there e0ists in his title or !ode of ac=uisition an" fla+ +hich
19
invalidates itE and that -ood faith is al+a"s presu!ed, and upon hi! +ho alle-es bad
faith on the part of a possessor rests the burden of proof.
Notabl", petitioners bou-ht the propert" +hen it +as still an unre-istered land. 1he
defense of havin- purchased the propert" in -ood faith !a" be availed of onl" +here
re-istered land is involved and the bu"er had relied in -ood faith on the clear title of the
re-istered o+ner.
7(
In Ong v. Olasi4an
78
in +hich a clai! of -ood faith +as raised b" petitioner +ho bou-ht
an unre-istered land, +e held2
inall", petitionersC clai! of -ood faith does not lie too as it is irrelevant2
H1Ihe issue of -ood faith or bad faith of the bu"er is relevant onl" +here the sub/ect of
the sale is re-istered land and the purchaser is bu"in- the sa!e fro! the re-istered
o+ner +hose title to the land is clean 0 0 0 in such case the purchaser +ho relies on the
clean title of the re-istered o+ner is protected if he is a purchaser in -ood faith for value.
Since the properties in =uestion are unre-istered lands, petitioners as subse=uent
bu"ers thereof did so at their peril. 1heir clai! of havin- bou-ht the land in -ood faith,
i.e., +ithout notice that so!e other person has a ri-ht to or interest in the propert",
+ould not protect the! if it turns out, as it actuall" did in this case, that their seller did not
o+n the propert" at the ti!e of the sale.
7'
Petitioners clai! that the sub/ect land is a public land, and that petitioners +ere issued
title over this land in %&';E that respondents did not present an" evidence to prove that
the sub/ect land +as alread" a private land prior to their ac=uisition and the issuance of
a free patent title to the!E that the presu!ption that the sub/ect land +as for!erl" part of
the !ass of alienable lands of public do!ain under the Re-alian doctrine, and +as
re-ularl" -ranted to petitioners b" +a" of free patent and certificate of title, re!ains
incontrovertible in favor of petitioner.)avvp%i)
1his issue +as onl" raised for the first ti!e in petitionersC Me!orandu! filed +ith us.
@ell5settled is the rule that issues not raised and?or ventilated in the trial court cannot be
raised for the first ti!e on appeal and cannot be considered for revie+ L to consider
=uestions belatedl" raised tra!ples on the basic principles of fair pla", /ustice and due
process.
7&
inall", +e find no error co!!itted b" the C) in affir!in- the R1CCs order for petitioners
to pa" respondents their correspondin- share in the produce of the sub/ect land fro! the
ti!e the" +ere deprived thereof until the possession is restored to the!. )s aptl" stated
b" the C), thus2
It is said that one of the attributes of o+nership is the ri-ht to en/o" and dispose of the
the thin- o+ned, 1he ri-ht to en/o" included the ri-ht to receive the produce of the thin-.
1he plaintiffs5appellees, as true o+ners of the sub/ect land +ere deprived of their
propert" +hen Ma0i!a Divison ille-all" sold it to spouses Dacla-s. )s such, e=uti"
de!ands that the plaintiff5appeellees be -iven +hat ri-htfull" belon-ed to the! under
the ti!e honored principle that a person cannot enrich hi!self at the e0pense of
another.
:$EREFORE, the petition for revie+ is "ENE". 1he Decision dated October %8, 7$$%
and Resolution dated )u-ust 8, 7$$# of the Court of )ppeals are #FFRME".
Costs a-ainst petitioners.
SO ORDERED.
IRS1 DIVISION
;G.R. No. 1183,+. *%&.%r/ 5, 1998<
"E!ELOPMENT (#N6 OF T$E P$LPPNES, petitioner, vs. COURT OF #PPE#LS
%&' L="# CU(#, respondents.
;G.R. No. 11836-. *%&.%r/ 5, 1998<
L="# P. CU(#, petitioner, vs. COURT OF #PPE#LS, "E!ELOPMENT (#N6 OF
T$E P$LPPNES %&' #GRPN# P. C#PER#L,respondents.
" E C S O N
"#!"E, *R., J.>
1hese t+o consolidated cases ste!!ed fro! a co!plaint
H%I
filed a-ainst the
Develop!ent 3an. of the Philippines *hereafter D3P, and )-ripina Caperal filed b"
B"dia Cuba *hereafter CD3), on 7% Ma" %&': +ith the Re-ional 1rial Court of
Pan-asinan, 3ranch :;. 1he said co!plaint sou-ht *%, the declaration of nullit" of
D3PGs appropriation of CD3)Gs ri-hts, title, and interests over a ;;5hectare fishpond
located in 3olinao, Pan-asinan, for bein- violative of )rticle 7$'' of the Civil CodeE *7,
the annul!ent of the Deed of Conditional Sale e0ecuted in her favor b" D3PE *#, the
annul!ent of D3PGs sale of the sub/ect fishpond to CaperalE *;, the restoration of her
ri-hts, title, and interests over the fishpondE and *:, the recover" of da!a-es, attorne"Gs
fees, and e0penses of liti-ation.
20
)fter the /oinder of issues follo+in- the filin- b" the parties of their respective pleadin-s,
the trial court conducted a pre5trial +here CD3) and D3P a-reed on the follo+in- facts,
+hich +ere e!bodied in the pre5trial order2
H7I
%. Plaintiff B"dia P. Cuba is a -rantee of a ishpond Bease )-ree!ent No. 7$'#
*ne+, dated Ma" %#, %&8; fro! the <overn!entE
7. Plaintiff B"dia P. Cuba obtained loans fro! the Develop!ent 3an. of the
Philippines in the a!ounts of P%$&,$$$.$$E P%$&,$$$.$$E and P&',8$$.$$ under
the ter!s stated in the Pro!issor" Notes dated Septe!ber (, %&8;E )u-ust %%,
%&8:E and )pril ;, %&88E
#. )s securit" for said loans, plaintiff B"dia P. Cuba e0ecuted t+o Deeds of
)ssi-n!ent of her Beasehold Ri-htsE
;. Plaintiff failed to pa" her loan on the scheduled dates thereof in accordance
+ith the ter!s of the Pro!issor" NotesE
:. @ithout foreclosure proceedin-s, +hether /udicial or e0tra5/udicial, defendant
D3P appropriated the Beasehold Ri-hts of plaintiff B"dia Cuba over the fishpond in
=uestionE
(. )fter defendant D3P has appropriated the Beasehold Ri-hts of plaintiff B"dia
Cuba over the fishpond in =uestion, defendant D3P, in turn, e0ecuted a Deed of
Conditional Sale of the Beasehold Ri-hts in favor of plaintiff B"dia Cuba over the
sa!e fishpond in =uestionE
8. In the ne-otiation for repurchase, plaintiff B"dia Cuba addressed t+o letters to
the Mana-er D3P, Da-upan Cit" dated Nove!ber (, %&8& and Dece!ber 7$,
%&8&. D3P thereafter accepted the offer to repurchase in a letter addressed to
plaintiff dated ebruar" %, %&'7E
'. )fter the Deed of Conditional Sale +as e0ecuted in favor of plaintiff B"dia
Cuba, a ne+ ishpond Bease )-ree!ent No. 7$'#5) dated March 7;, %&'$ +as
issued b" the Ministr" of )-riculture and ood in favor of plaintiff B"dia Cuba onl",
e0cludin- her husbandE
&. Plaintiff B"dia Cuba failed to pa" the a!orti6ations stipulated in the Deed of
Conditional SaleE
%$. )fter plaintiff B"dia Cuba failed to pa" the a!orti6ation as stated in Deed of
Conditional Sale, she entered +ith the D3P a te!porar" arran-e!ent +hereb" in
consideration for the defer!ent of the Notarial Rescission of Deed of Conditional
Sale, plaintiff B"dia Cuba pro!ised to !a.e certain pa"!ents as stated in
te!porar" )rran-e!ent dated ebruar" 7#, %&'7E
%%. Defendant D3P thereafter sent a Notice of Rescission thru Notarial )ct dated
March %#, %&';, and +hich +as received b" plaintiff B"dia CubaE
%7. )fter the Notice of Rescission, defendant D3P too. possession of the
Beasehold Ri-hts of the fishpond in =uestionE
%#. 1hat after defendant D3P too. possession of the Beasehold Ri-hts over the
fishpond in =uestion, D3P advertised in the SDND)> PDNCA the public biddin-
dated 4une 7;, %&';, to dispose of the propert"E
%;. 1hat the D3P thereafter e0ecuted a Deed of Conditional Sale in favor of
defendant )-ripina Caperal on )u-ust %(, %&';E
%:. 1hereafter, defendant Caperal +as a+arded ishpond Bease )-ree!ent No.
7$'#5) on Dece!ber 7', %&'; b" the Ministr" of )-riculture and ood.
Defendant Caperal ad!itted onl" the facts stated in para-raphs %; and %: of the pre5
trial order.
H#I
1rial +as thereafter had on other !atters.
1he principal issue presented +as +hether the act of D3P in appropriatin- to itself
CD3)Gs leasehold ri-hts over the fishpond in =uestion +ithout foreclosure proceedin-s
+as contrar" to )rticle 7$'' of the Civil Code and, therefore, invalid. CD3) insisted on
an affir!ative resolution. D3P stressed that it !erel" e0ercised its contractual ri-ht
under the )ssi-n!ents of Beasehold Ri-hts, +hich +as not a contract of
!ort-a-e. Defendant Caperal sided +ith D3P.
1he trial court resolved the issue in favor of CD3) b" declarin- that D3PGs ta.in-
possession and o+nership of the propert" +ithout foreclosure +as plainl" violative of
)rticle 7$'' of the Civil Code +hich provides as follo+s2
)R1. 7$''. 1he creditor cannot appropriate the thin-s -iven b" +a" of pled-e or
!ort-a-e, or dispose of the!. )n" stipulation to the contrar" is null and void.
It disa-reed +ith D3PGs stand that the )ssi-n!ents of Beasehold Ri-hts +ere
not contracts of !ort-a-e because *%, the" +ere -iven as securit" for loans, *7,
althou-h the Qfishpond landR in =uestion is still a public land, CD3)Gs leasehold ri-hts
and interest thereon are alienable ri-hts +hich can be the proper sub/ect of a !ort-a-eE
and *#, the intention of the contractin- parties to treat the )ssi-n!ent of Beasehold
Ri-hts as a !ort-a-e +as obvious and un!ista.ableE hence, upon CD3)Gs default,
D3PGs onl" ri-ht +as to foreclose the )ssi-n!ent in accordance +ith la+.
1he trial court also declared invalid condition no. %7 of the )ssi-n!ent of Beasehold
Ri-hts for bein- a clear case of pactu4 co44issoriu4 e0pressl" prohibited and
declared null and void b" )rticle 7$'' of the Civil Code. It then concluded that since
D3P never ac=uired la+ful o+nership of CD3)Gs leasehold ri-hts, all acts of o+nership
and possession b" the said ban. +ere void. )ccordin-l", the Deed of Conditional Sale
in favor of CD3), the notarial rescission of such sale, and the Deed of Conditional Sale
in favor of defendant Caperal, as +ell as the )ssi-n!ent of Beasehold Ri-hts e0ecuted
b" Caperal in favor of D3P, +ere also void and ineffective.
)s to da!a-es, the trial court found Qa!ple evidence on recordR that in %&'; the
representatives of D3P e/ected CD3) and her careta.ers not onl" fro! the fishpond
area but also fro! the ad/oinin- bi- houseE and that +hen CD3)Gs son and careta.er
+ent there on %: Septe!ber %&':, the" found the said house unoccupied and destro"ed
and CD3)Gs personal belon-in-s, !achineries, e=uip!ent, tools, and other articles
21
used in fishpond operation +hich +ere .ept in the house +ere !issin-. 1he !issin-
ite!s +ere valued at about P::$,$$$. It further found that +hen CD3) and her !en
+ere e/ected b" D3P for the first ti!e in %&8&, CD3) had stoc.ed the fishpond +ith
7:$,$$$ pieces of ban-us fish *!il.fish,, all of +hich died because the D3P
representatives prevented CD3)Gs !en fro! feedin- the fish. )t the conservative price
of P#.$$ per fish, the -ross value +ould have been P(&$,$$$, and after deductin- 7:N
of said value as reasonable allo+ance for the cost of feeds, CD3) suffered a loss
of P:%8,:$$. It then set the a--re-ate of the actual da!a-es sustained b" CD3)
at P%,$(8,:$$.
1he trial court further found that D3P +as -uilt" of -ross bad faith in falsel" representin-
to the 3ureau of isheries that it had foreclosed its !ort-a-e on CD3)Gs leasehold
ri-hts. Such representation induced the said 3ureau to ter!inate CD3)Gs leasehold
ri-hts and to approve the Deed of Conditional Sale in favor of CD3). )nd considerin-
that b" reason of her unla+ful e/ect!ent b" D3P, CD3) Qsuffered !oral shoc.,
de-radation, social hu!iliation, and serious an0ieties for +hich she beca!e sic. and
had to be hospitali6edR the trial court found her entitled to !oral and e0e!plar"
da!a-es. 1he trial court also held that CD3) +as entitled to P%$$,$$$ attorne"Gs fees
in vie+ of the considerable e0penses she incurred for la+"ersG fees and in vie+ of the
findin- that she +as entitled to e0e!plar" da!a-es.
In its decision of #% 4anuar" %&&$,
H;I
the trial court disposed as follo+s2
@AEREORE, /ud-!ent is hereb" rendered in favor of plaintiff2
%. DECB)RIN< null and void and +ithout an" le-al effect the act of defendant
Develop!ent 3an. of the Philippines in appropriatin- for its o+n interest, +ithout an"
/udicial or e0tra5/udicial foreclosure, plaintiffGs leasehold ri-hts and interest over the
fishpond land in =uestion under her ishpond Bease )-ree!ent No. 7$'# *ne+,E
7. DECB)RIN< the Deed of Conditional Sale dated ebruar" 7%, %&'$ b" and bet+een
the defendant Develop!ent 3an. of the Philippines and plaintiff *E0h. E and E0h. %, and
the acts of notarial rescission of the Develop!ent 3an. of the Philippines relative to said
sale *E0hs. %( and 7(, as void and ineffectiveE
#. DECB)RIN< the Deed of Conditional Sale dated )u-ust %(, %&'; b" and bet+een
the Develop!ent 3an. of the Philippines and defendant )-ripina Caperal *E0h. and
E0h. 7%,, the ishpond Bease )-ree!ent No. 7$'#5) dated Dece!ber 7', %&'; of
defendant )-ripina Caperal *E0h. 7#, and the )ssi-n!ent of Beasehold Ri-hts dated
ebruar" %7, %&': e0ecuted b" defendant )-ripina Caperal in favor of the defendant
Develop!ent 3an. of the Philippines *E0h. 7;, as void ab initioE
;. ORDERIN< defendant Develop!ent 3an. of the Philippines and defendant )-ripina
Caperal, /ointl" and severall", to restore to plaintiff the latterGs leasehold ri-hts and
interests and ri-ht of possession over the fishpond land in =uestion, +ithout pre/udice to
the ri-ht of defendant Develop!ent 3an. of the Philippines to foreclose the securities
-iven b" plaintiffE
:. ORDERIN< defendant Develop!ent 3an. of the Philippines to pa" to plaintiff the
follo+in- a!ounts2
a, 1he su! of ONE MIBBION SIS1>5SEVEN 1AODS)ND IVE ADNDRED PESOS
*P%,$(8,:$$.$$,, as and for actual da!a-esE
b, 1he su! of ONE ADNDRED 1AODS)ND *P%$$,$$$.$$, PESOS as !oral da!a-esE
c, 1he su! of I1> 1AODS)ND *P:$,$$$.$$, PESOS, as and for e0e!plar"
da!a-esE
d, )nd the su! of ONE ADNDRED 1AODS)ND *P%$$,$$$.$$, PESOS, as and for
attorne"Gs feesE
(. )nd ORDERIN< defendant Develop!ent 3an. of the Philippines to rei!burse and
pa" to defendant )-ripina Caperal the su! of ONE MIBBION IVE ADNDRED 1AIR1>5
1@O 1AODS)ND SIS ADNDRED 1EN PESOS )ND SEVEN1>5IVE CEN1)VOS
*P%,:#7,(%$.8:, representin- the a!ounts paid b" defendant )-ripina Caperal to
defendant Develop!ent 3an. of the Philippines under their Deed of Conditional Sale.
CD3) and D3P interposed separate appeals fro! the decision to the Court of
)ppeals. 1he for!er sou-ht an increase in the a!ount of da!a-es, +hile the latter
=uestioned the findin-s of fact and la+ of the lo+er court.
In its decision
H:I
of 7: Ma" %&&;, the Court of )ppeals ruled that *%, the trial court erred
in declarin- that the deed of assi-n!ent +as null and void and that defendant Caperal
could not validl" ac=uire the leasehold ri-hts fro! D3PE *7, contrar" to the clai! of D3P,
the assi-n!ent +as not a cession under )rticle %7:: of the Civil Code because D3P
appeared to be the sole creditor to CD3) 5 cession presupposes pluralit" of debts and
creditorsE *#, the deeds of assi-n!ent represented the voluntar" act of CD3) in
assi-nin- her propert" ri-hts in pa"!ent of her debts, +hich a!ounted to a novation of
the pro!issor" notes e0ecuted b" CD3) in favor of D3PE *;, CD3) +as estopped fro!
=uestionin- the assi-n!ent of the leasehold ri-hts, since she a-reed to repurchase the
said ri-hts under a deed of conditional saleE and *:, condition no. %7 of the deed of
assi-n!ent +as an e0press authorit" fro! CD3) for D3P to sell +hatever ri-ht she had
over the fishpond. It also ruled that CD3) +as not entitled to loss of profits for lac.
of evidence, but a-reed +ith the trial court as to the actual da!a-es of P%,$(8,:$$. It,
ho+ever, deleted the a!ount of e0e!plar" da!a-es and reduced the a+ard of !oral
da!a-es fro! P%$$,$$$ to P:$,$$$ and attorne"Gs fees, fro! P%$$,$$$ to P:$,$$$.
1he Court of )ppeals thus declared as valid the follo+in-2 *%, the act of D3P in
appropriatin- CubaGs leasehold ri-hts and interest under ishpond Bease )-ree!ent
No. 7$'#E *7, the deeds of assi-n!ent e0ecuted b" Cuba in favor of D3PE *#, the deed
of conditional sale bet+een CD3) and D3PE and *;, the deed of conditional sale
bet+een D3P and Caperal, the ishpond Bease )-ree!ent in favor of Caperal, and the
assi-n!ent of leasehold ri-hts e0ecuted b" Caperal in favor of D3P. It then ordered
D3P to turn over possession of the propert" to Caperal as la+ful holder of the leasehold
22
ri-hts and to pa" CD3) the follo+in- a!ounts2 *a, P%,$(8,:$$ as actual
da!a-esE P:$,$$$ as !oral da!a-esE and P:$,$$$ as attorne"Gs fees.
Since their !otions for reconsideration +ere denied,
H(I
D3P and CD3) filed separate
petitions for revie+.
In its petition *<.R. No. %%'#;7,, D3P assails the a+ard of actual and !oral da!a-es
and attorne"Gs fees in favor of CD3).
Dpon the other hand, in her petition *<.R. No. %%'#(8,, CD3) contends that the Court
of )ppeals erred *%, in not holdin- that the =uestioned deed of assi-n!ent +as
a pactu4 co44issoriu4 contrar" to )rticle 7$'' of the Civil CodeE *b, in holdin- that
the deed of assi-n!ent effected a novation of the pro!issor" notesE *c, in holdin- that
CD3) +as estopped fro! =uestionin- the validit" of the deed of assi-n!ent +hen she
a-reed to repurchase her leasehold ri-hts under a deed of conditional saleE and *d, in
reducin- the a!ounts of !oral da!a-es and attorne"Gs fees, in deletin- the a+ard of
e0e!plar" da!a-es, and in not increasin- the a!ount of da!a-es.
@e a-ree +ith CD3) that the assi-n!ent of leasehold ri-hts +as a !ort-a-e contract.
It is undisputed that CD3) obtained fro! D3P three separate loans totallin- P##:,$$$,
each of +hich +as covered b" a pro!issor" note. In all of these notes, there +as a
provision that2 QIn the event of foreclosure of the !ort-a-e securin- this notes, I?@e
further bind !"self?ourselves, /ointl" and severall", to pa" the deficienc", if an".R
H8I
Si!ultaneous +ith the e0ecution of the notes +as the e0ecution of Q)ssi-n!ents of
Beasehold Ri-htsR
H'I
+here CD3) assi-ned her leasehold ri-hts and interest on a ;;5
hectare fishpond, to-ether +ith the i!prove!ents thereon. )s pointed out b" CD3), the
deeds of assi-n!ent constantl" referred to the assi-nor *CD3), as Qborro+erRE the
assi-ned ri-hts, as !ort-a-ed propertiesE and the instru!ent itself, as !ort-a-e
contract. Moreover, under condition no. 77 of the deed, it +as provided that Qfailure to
co!pl" +ith the ter!s and condition of an" of the loans shall cause all other loans to
beco!e due and de!andable and all !ort-a-es shall be foreclosed.R )nd, condition
no. ## provided that if Qforeclosure is actuall" acco!plished, the usual %$N attorne"Gs
fees and %$N li=uidated da!a-es of the total obli-ation shall be i!posed.R 1here is,
therefore, no shred of doubt that a !ort-a-e +as intended.
3esides, in their stipulation of facts the parties ad!itted that the assi-n!ent +as b" +a"
of securit" for the pa"!ent of the loansE thus2
#. )s securit" for said loans, plaintiff B"dia P. Cuba e0ecuted t+o Deeds of )ssi-n!ent
of her Beasehold Ri-hts.
In 'eopleEs =an( F Brust Co. vs. Odo4,
H&I
this Court had the occasion to rule that an
assi-n!ent to -uarantee an obli-ation is in effect a !ort-a-e.
@e find no !erit in D3PGs contention that the assi-n!ent novated the pro!issor" notes
in that the obli-ation to pa" a su! of !one" the loans *under the pro!issor" notes, +as
substituted b" the assi-n!ent of the ri-hts over the fishpond *under the deed of
assi-n!ent,. )s correctl" pointed out b" CD3), the said assi-n!ent !erel"
co!ple!ented or supple!ented the notesE both could stand to-ether. 1he for!er +as
onl" an accessor" to the latter. Contrar" to D3PGs sub!ission, the obli-ation to pa" a
su! of !one" re!ained, and the assi-n!ent !erel" served as securit" for the loans
covered b" the pro!issor" notes. Si-nificantl", both the deeds of assi-n!ent and the
pro!issor" notes +ere e0ecuted on the sa!e dates the loans +ere -ranted. )lso, the
last para-raph of the assi-n!ent stated2 Q1he assi-nor further reiterates and states all
ter!s, covenants, and conditions stipulated in the pro!issor" note or notes coverin- the
proceeds of this loan, !a.in- said pro!issor" note or notes, to all intent and purposes,
an inte-ral part hereof.R
Neither did the assi-n!ent a!ount to pa"!ent b" cession under )rticle %7:: of the Civil
Code for the plain and si!ple reason that there +as onl" one creditor, the D3P. )rticle
%7:: conte!plates the e0istence of t+o or !ore creditors and involves the assi-n!ent
of all the debtorGs propert".
Nor did the assi-n!ent constitute dation in pa"!ent under )rticle %7;: of the civil Code,
+hich reads2 Q,ation in pa"!ent, +hereb" propert" is alienated to the creditor in
satisfaction of a debt in !one", shall be -overned b" the la+ on sales.R It bears
stressin- that the assi-n!ent, bein- in its essence a !ort-a-e, +as but a securit" and
not a satisfaction of indebtedness.
H%$I
@e do not, ho+ever, bu" CD3)Gs ar-u!ent that condition no. %7 of the deed of
assi-n!ent constituted pactu4 co44issoriu4. Said condition reads2
%7. 1hat effective upon the breach of an" condition of this assi-n!ent, the )ssi-nor
hereb" appoints the )ssi-nee his )ttorne"5in5fact +ith full po+er and authorit" to ta.e
actual possession of the propert" above5described, to-ether +ith all i!prove!ents
thereon, sub/ect to the approval of the Secretar" of )-riculture and Natural Resources,
to lease the sa!e or an" portion thereof and collect rentals, to !a.e repairs or
i!prove!ents thereon and pa" the sa!e, to sell or other+ise dispose of +hatever ri-hts
the )ssi-nor has or !i-ht have over said propert" and?or its i!prove!ents and perfor!
an" other act +hich the )ssi-nee !a" dee! convenient to protect its interest. )ll
e0penses advanced b" the )ssi-nee in connection +ith purpose above indicated +hich
shall bear the sa!e rate of interest afore!entioned are also -uaranteed b" this
)ssi-n!ent. )n" a!ount received fro! rents, ad!inistration, sale or disposal of said
propert" !a" be supplied b" the )ssi-nee to the pa"!ent of repairs, i!prove!ents,
ta0es, assess!ents and other incidental e0penses and obli-ations and the balance, if
an", to the pa"!ent of interest and then on the capital of the indebtedness secured
hereb". If after disposal or sale of said propert" and upon application of total a!ounts
received there shall re!ain a deficienc", said )ssi-nor hereb" binds hi!self to pa" the
sa!e to the )ssi-nee upon de!and, to-ether +ith all interest thereon until full"
paid. 1he po+er herein -ranted shall not be revo.ed as lon- as the )ssi-nor is
indebted to the )ssi-nee and all acts that !a" be e0ecuted b" the )ssi-nee b" virtue of
said po+er are hereb" ratified.
1he ele!ents of pactu4 co44issoriu4 are as follo+s2 *%, there should be a propert"
!ort-a-ed b" +a" of securit" for the pa"!ent of the principal obli-ation, and *7, there
should be a stipulation for auto!atic appropriation b" the creditor of the thin- !ort-a-ed
in case of non5pa"!ent of the principal obli-ation +ithin the stipulated period.
H%%I
23
Condition no. %7 did not provide that the o+nership over the leasehold ri-hts +ould
auto!aticall" pass to D3P upon CD3)Gs failure to pa" the loan on ti!e. It !erel"
provided for the appoint!ent of D3P as attorne"5in5fact +ith authorit", a!on- other
thin-s, to sell or other+ise dispose of the said real ri-hts, in case of default b" CD3),
and to appl" the proceeds to the pa"!ent of the loan. 1his provision is a standard
condition in !ort-a-e contracts and is in confor!it" +ith )rticle 7$'8 of the Civil Code,
+hich authori6es the !ort-a-ee to foreclose the !ort-a-e and alienate the !ort-a-ed
propert" for the pa"!ent of the principal obli-ation.
D3P, ho+ever, e0ceeded the authorit" vested b" condition no. %7 of the deed of
assi-n!ent. )s ad!itted b" it durin- the pre5trial, it had QH+Iithout foreclosure
proceedin-s, +hether /udicial or e0tra/udicial, T appropriated the HlIeasehold HrIi-hts of
plaintiff B"dia Cuba over the fishpond in =uestion.R Its contention that it li!ited itself to
!ere ad!inistration b" postin- careta.ers is further belied b" the deed of conditional
sale it e0ecuted in favor of CD3). 1he deed stated2
@AERE)S, the Vendor HD3PI b" virtue of a deed of assi-n!ent e0ecuted in its favor b"
the herein vendees HCuba spousesI the for!er ac=uired all the ri-hts and interest of the
latter over the above5described propert"E
T
1he title to the real estate propert" HsicI and all i!prove!ents thereon shall re!ain in the
na!e of the Vendor until after the purchase price, advances and interest shall have
been full" paid. *E!phasis supplied,.
It is obvious fro! the above5=uoted para-raphs that D3P had appropriated and ta.en
o+nership of CD3)Gs leasehold ri-hts !erel" on the stren-th of the deed of assi-n!ent.
D3P cannot ta.e refu-e in condition no. %7 of the deed of assi-n!ent to /ustif" its act of
appropriatin- the leasehold ri-hts. )s stated earlier, condition no. %7 did not provide
that CD3)Gs default +ould operate to vest in D3P o+nership of the said ri-hts. 3esides,
an assi-n!ent to -uarantee an obli-ation, as in the present case, is virtuall" a !ort-a-e
and not an absolute conve"ance of title +hich confers o+nership on the assi-nee.
H%7I
)t an" rate, D3PGs act of appropriatin- CD3)Gs leasehold ri-hts +as violative of )rticle
7$'' of the Civil Code, +hich forbids a creditor fro! appropriatin-, or disposin- of, the
thin- -iven as securit" for the pa"!ent of a debt.
1he fact that CD3) offered and a-reed to repurchase her leasehold ri-hts fro! D3P did
not estop her fro! =uestionin- D3PGs act of appropriation. Estoppel is unavailin- in this
case. )s held b" this Court in so!e cases,
H%#I
estoppel cannot -ive validit" to an act that
is prohibited b" la+ or a-ainst public polic". Aence, the appropriation of the leasehold
ri-hts, bein- contrar" to )rticle 7$'' of the Civil Code and to public polic", cannot be
dee!ed validated b" estoppel.
Instead of ta.in- o+nership of the =uestioned real ri-hts upon default b" CD3), D3P
should have foreclosed the !ort-a-e, as has been stipulated in condition no. 77 of the
deed of assi-n!ent. 3ut, as ad!itted b" D3P, there +as no such foreclosure. >et, in
its letter dated 7( October %&8&, addressed to the Minister of )-riculture and Natural
Resources and coursed throu-h the Director of the 3ureau of isheries and )=uatic
Resources, D3P declared that it Qhad foreclosed the !ort-a-e and enforced the
assi-n!ent of leasehold ri-hts on March 7%, %&8& for failure of said spouses HCuba
spoucesI to pa" their loan a!orti6ations.R
H%;I
1his onl" -oes to sho+ that D3P +as a+are
of the necessit" of foreclosure proceedin-s.
In vie+ of the false representation of D3P that it had alread" foreclosed the !ort-a-e,
the 3ureau of isheries cancelled CD3)Gs ori-inal lease per!it, approved the deed of
conditional sale, and issued a ne+ per!it in favor of CD3). Said acts +hich +ere
predicated on such false representation, as +ell as the subse=uent acts e!anatin- fro!
D3PGs appropriation of the leasehold ri-hts, should therefore be set aside. 1o validate
these acts +ould open the flood-ates to circu!vention of )rticle 7$'' of the Civil Code.
Even in cases +here foreclosure proceedin-s +ere had, this Court had not hesitated to
nullif" the conse=uent auction sale for failure to co!pl" +ith the re=uire!ents laid do+n
b" la+, such as )ct No. #%#:, as a!ended.
H%:I
@ith !ore reason that the sale of propert"
-iven as securit" for the pa"!ent of a debt be set aside if there +as no prior foreclosure
proceedin-.
Aence, D3P should render an accountin- of the inco!e derived fro! the operation of
the fishpond in =uestion and appl" the said inco!e in accordance +ith condition no. %7
of the deed of assi-n!ent +hich provided2 Q)n" a!ount received fro! rents,
ad!inistration, T !a" be applied to the pa"!ent of repairs, i!prove!ents, ta0es,
assess!ent, and other incidental e0penses and obli-ations and the balance, if an", to
the pa"!ent of interest and then on the capital of the indebtednessT.R
@e shall no+ ta.e up the issue of da!a-es.
)rticle 7%&& provides2
E0cept as provided b" la+ or b" stipulation, one is entitled to an ade=uate
co!pensation onl" for such pecuniar" loss suffered b" hi! as he has dul" proved. Such
co!pensation is referred to as actual or co!pensator" da!a-es.
)ctual or co!pensator" da!a-es cannot be presu!ed, but !ust be proved +ith
reasonable de-ree of certaint".
H%(I
) court cannot rel" on speculations, con/ectures, or
-uess+or. as to the fact and a!ount of da!a-es, but !ust depend upon co!petent
proof that the" have been suffered b" the in/ured part" and on the best obtainable
evidence of the actual a!ount thereof.
H%8I
It !ust point out specific facts +hich could
afford a basis for !easurin- +hatever co!pensator" or actual da!a-es are borne.
H%'I
In the present case, the trial court a+arded in favor of CD3) P%,$(8,:$$ as actual
da!a-es consistin- of P::$,$$$ +hich represented the value of the alle-ed lost articles
of CD3) and P:%8,:$$ +hich represented the value of the 7#$,$$$ pieces of ban-us
alle-edl" stoc.ed in %&8& +hen D3P first e/ected CD3) fro! the fishpond and the
ad/oinin- house. 1his a+ard +as affir!ed b" the Court of )ppeals.
@e find that the alle-ed loss of personal belon-in-s and e=uip!ent +as not proved b"
clear evidence. Other than the testi!on" of CD3) and her careta.er, there +as no
proof as to the e0istence of those ite!s before D3P too. over the fishpond in
24
=uestion. )s pointed out b" D3P, there +as not Qinventor" of the alle-ed lost ite!s
before the loss +hich is nor!al in a pro/ect +hich so!eti!es, if not !ost often, is left to
the care of other persons.R Neither +as a sin-le receipt or record of ac=uisition
presented.
Curiousl", in her co!plaint dated %8 Ma" %&':, CD3) included Qlosses of propert"R as
a!on- the da!a-es resultin- fro! D3PGs ta.e5over of the fishpond. >et, it +as onl" in
Septe!ber %&': +hen her son and a careta.er +ent to the fishpond and the ad/oinin-
house that she ca!e to .no+ of the alle-ed loss of several articles. Such clai! for
Qlosses of propert",R havin- been !ade before .no+led-e of the alle-ed actual loss, +as
therefore speculative. 1he alle-ed loss could have been a !ere afterthou-ht or
subterfu-e to /ustif" her clai! for actual da!a-es.
@ith re-ard to the a+ard of P:%8,$$$ representin- the value of the alle-ed 7#$,$$$
pieces of ban-us +hich died +hen D3P too. possession of the fishpond in March %&8&,
the sa!e +as not called for. Such loss +as not dul" provedE besides, the clai! therefor
+as dela"ed unreasonabl". ro! %&8& until after the filin- of her co!plaint in court in
Ma" %&':, CD3) did not brin- to the attention of D3P the alle-ed loss. In fact, in her
letter dated 7; October %&8&,
H%&I
she declared2
%. 1hat fro! ebruar" to Ma" %&8', I +as then seriousl" ill in Manila and +ithin the
sa!e period I ne-lected the !ana-e!ent and supervision of the cultivation and harvest
of the produce of the aforesaid fishpond thereb" resultin- to the irreparable loss in the
produce of the sa!e in the a!ount of about P:$$,$$$.$$ to !" -reat da!a-e and
pre/udice due to fraudulent acts of so!e of !" fishpond +or.ers.
No+here in the said letter, +hich +as +ritten seven !onths after D3P too. possession
of the fishpond, did CD3) inti!ate that upon D3PGs ta.e5over there +as a total of
7#$,$$$ pieces of ban-us, but all of +hich died because of D3PGs representatives
prevented her !en fro! feedin- the fish.
1he a+ard of actual da!a-es should, therefore, be struc. do+n for lac. of sufficient
basis.
In vie+, ho+ever, of D3PGs act of appropriatin- CD3)Gs leasehold ri-hts +hich +as
contrar" to la+ and public polic", as +ell as its false representation to the then Ministr"
of )-riculture and Natural Resources that it had Qforeclosed the !ort-a-e,R an a+ard of
!oral da!a-es in the a!ount of P:$,$$$ is in order confor!abl" +ith )rticle 77%&*%$,,
in relation to )rticle 7%, of the Civil Code. E0e!plar" or corrective da!a-es in the
a!ount of P7:,$$$ should li.e+ise be a+arded b" +a" of e0a!ple or correction for the
public -ood.
H7$I
1here bein- an a+ard of e0e!plar" da!a-es, attorne"Gs fees are also
recoverable.
H7%I
:$EREFORE, the 7: Ma" %&&; Decision of the Court of )ppeals in C)5<.R. CV No.
7(:#: is hereb" REVERSED, e0cept as to the a+ard of P:$,$$$ as !oral da!a-es,
+hich is hereb" sustained. 1he #% 4anuar" %&&$ Decision of the Re-ional 1rial Court of
Pan-asinan, 3ranch :;, in Civil Case No. )5%:8; is MODIIED settin- aside the findin-
that condition no. %7 of the deed of assi-n!ent constituted pactu4 co44issoriu4 and
the a+ard of actual da!a-esE and b" reducin- the a!ounts of !oral da!a-es
fro! P%$$,$$$ toP:$,$$$E the e0e!plar" da!a-es, fro! P:$,$$$ to P7:,$$$E and the
attorne"Gs fees, fro! P%$$,$$$ to P7$,$$$. 1he Develop!ent 3an. of the Philippines is
hereb" ordered to render an accountin- of the inco!e derived fro! the operation of the
fishpond in =uestion.
Bet this case be REM)NDED to the trial court for the reception of the inco!e state!ent
of D3P, as +ell as the state!ent of the account of B"dia P. Cuba, and for the
deter!ination of each part"Gs financial obli-ation to one another.
SO ORDERED.
25
Republic of the Philippines
SUPREME COURT
Manila
1AIRD DIVISION
G.R. No. 15,,50 *.5/ +8, +008
*OSEP$ L. S=, NELSON GOLPEO %&' *O$N T#N, Petitioners,
vs.
NCOL#S C#PSTR#NO, *R., 1.b1t2t.te' b/ *OSEF# (. C#PSTR#NO,
REME"OS TEREST# (. C#PSTR#NO %&' M#RO GREGORO (. C#PSTR#NO?
NENT# F. SCOTT? SPS. *U#NTO *#ML#R %&' *OSEFN# *#ML#R? SPS.
M#R#NO GLTUR# %&' #"EL# GLTUR#, Respondents.
R E S O B D 1 I O N
N#C$UR#, J.:
1his is a petition for revie+ on certiorari under Rule ;: of the Rules of Court of the
Decision of the Court of )ppeals *C), dated 4ul" 7#, 7$$7 in C)5<.R. CV No. :##%;.
1he case ori-inated fro! an action for reconve"ance of a lar-e tract of land in Caloocan
Cit" before the Re-ional 1rial Court *R1C,, 3ranch %7&, Caloocan Cit", entitled Nicolas
Capistrano, 4r. v. Nenita . Scott, Spouses 4uanito and 4osefina 4a!ilar, 4oseph B. S",
Nelson <olpeo and 4ohn 1an, and the Re-ister of Deeds, Caloocan Cit". Said case +as
doc.eted as Civil Case No. C5%:8&%.
1he antecedents are as follo+s2
So!eti!e in %&'$, Nenita Scott *Scott, approached respondent Nicolas Capistrano, 4r.
*Capistrano, and offered her services to help hi! sell his %#,8': s=uare !eters of land
covered b" 1ransfer Certificate of 1itle *1C1, No. 8(;&( of the Re-ister of Deeds of
Caloocan Cit". Capistrano -ave her a te!porar" authorit" to sell +hich e0pired +ithout
an" sale transaction bein- !ade. 1o his shoc., he discovered later that 1C1 No. 8(;&(,
+hich +as in his na!e, had alread" been cancelled on 4une 7;, %&&7 and a ne+ one,
1C1 No. 7;&&:&, issued over the sa!e propert" on the sa!e date to 4osefina ).
4a!ilar. 1C1 No. 7;&&:& li.e+ise had alread" been cancelled and replaced b" three *#,
1C1s *Nos. 7:%:7;, 7:%:7:, and 7:%:7(,, all in the na!es of the 4a!ilar spouses. 1C1
Nos. 7:%:7; and 7:%:7( had also been cancelled and replaced b" 1C1 Nos. 7(77'(
and 7(77'8 issued to Nelson <olpeo and 4ohn 3. 1an, respectivel".
Dpon further in=uiries, Capistrano also discovered the follo+in-2
%. 1he cancellation of his 1C1 No. 8(;&( and the issuance of 1C1 No. 7;&&:& to
4a!ilar +ere based upon t+o *7, deeds of sale, i.e., a 9Deed of )bsolute Sale9
purportedl" e0ecuted b" hi! in favor of Scott on March &, %&'$ and a 9Deed of )bsolute
Sale9 alle-edl" e0ecuted b" Scott in favor of 4a!ilar on Ma" %8, %&&$.
7. 1he supposed %&'$ sale fro! hi! to Scott +as for P%:$,$$$.$$E but despite the lapse
of !ore than %$ "ears thereafter, the alle-ed %&&$ sale fro! Scott to 4a!ilar +as also
for P%:$,$$$.$$.
#. 3oth deeds +ere presented for re-istration si!ultaneousl" on 4une 7;, %&&7.
;. )lthou-h the deed in favor of Scott states that it +as e0ecuted on March &, %&'$, the
annotation thereof at the bac. of 1C1 No. 8(;&( states that the date of the instru!ent is
March &, %&&$.
:. Even if there +as no direct sale fro! Capistrano to 4a!ilar, the transfer of title +as
!ade directl" to the latter. No 1C1 +as issued in favor of Scott.
(. 1he issuance of 1C1 No. 7;&&:& in favor of 4a!ilar +as +ith the help of 4oseph S",
+ho provided for *sic, !one" for the pa"!ent of the capital -ains ta0, docu!entar"
sta!ps, transfer fees and other e0penses of re-istration of the deeds of sale.
8. On 4ul" ', %&&7, an )ffidavit of )dverse Clai! +as annotated at the bac. of 4a!ilarGs
1C1 No. 7;&&:& at the instance of S", <olpeo, and 1an under a Contract to Sell in their
favor b" the 4a!ilar spouses. Said contract +as e0ecuted so!eti!e in Ma", %&&7 +hen
the title to the propert" +as still in the na!e of Capistrano.
'. )round 4ul" 7', %&&7, upon re=uest of the 4a!ilar spouses, 1C1 No. 7;&&:& +as
cancelled and three *#, ne+ certificates of title *1C1 Nos. 7:%:7;, 7:%:7:, and 7:%:7(,
all in the na!e of 4a!ilar on the basis of an alle-ed subdivision plan *No. Psd5%#5
$%%&%8, +ithout CapistranoGs .no+led-e and consent as re-istered o+ner. 1he notice of
adverse clai! of S", <olpeo, and 1an +as carried over to the three ne+ titles.
&. )round )u-ust %', %&&7, S", <olpeo, and 1an filed Civil Case No. C5%:::% a-ainst
the 4a!ilars and another couple, the <iltura spouses, for alle-ed violations of the
Contract to Sell. 1he" caused a notice of lis pendens to be annotated on the three *#,
1C1s in 4a!ilarGs na!e. Said civil case, ho+ever, +as not prosecuted.
%$. On 4anuar" 7(, %&&#, a Deed of )bsolute Sale +as e0ecuted b" the 4a!ilars and
the <ilturas, in favor of <olpeo and 1an. 1hus, 1C1 Nos. 7:%:7; and 7:%:7( +ere
cancelled and 1C1 Nos. 7(77'( and 7(77'8 +ere issued to <olpeo and 1an,
respectivel". 1C1 No. 7:%:7: re!ained in the na!e of 4a!ilar.
%
1hus, the action for reconve"ance filed b" Capistrano, alle-in- that his and his +ifeGs
si-natures on the purported deed of absolute sale in favor of Scott +ere for-eriesE that
the o+nerGs duplicate cop" of 1C1 No. 8(;&( in his na!e had al+a"s been in his
26
possessionE and that Scott, the 4a!ilar spouses, <olpeo, and 1an +ere not innocent
purchasers for value because the" all participated in defraudin- hi! of his propert".
Capistrano clai!edP%,$$$,$$$.$$ fro! all defendants as !oral da!a-es, P%$$,$$$.$$
as e0e!plar" da!a-esE and P%$$,$$$.$$ as attorne"Gs fees.
In their )ns+er +ith Counterclai!, the 4a!ilar spouses denied the alle-ations in the
co!plaint and clai!ed that Capistrano had no cause of action a-ainst the!, as there
+as no privit" of transaction bet+een the!E the issuance of 1C1 No. 7;&&:& in their
na!es +as proper, valid, and le-alE and that Capistrano +as in estoppel. 3" +a" of
counterclai!, the" sou-ht P:$,$$$.$$ as actual da!a-es, P:$,$$$.$$ as !oral
da!a-es, P:$,$$$.$$ as e0e!plar" da!a-es, and P:$,$$$.$$ as attorne"Gs fees.
In their )ns+er, S", <olpeo, and 1an denied the alle-ations in the co!plaint and alle-ed
that Capistrano had no cause of action a-ainst the!E that at the ti!e the" bou-ht the
propert" fro! the 4a!ilars and the <ilturas as unre-istered o+ners, there +as nothin- in
the certificates of title that +ould indicate an" vice in its o+nershipE that a bu"er in -ood
faith of a re-istered realt" need not loo. be"ond the 1orrens title to search for an"
defectE and that the" +ere innocent purchasers of the land for value. )s counterclai!,
the" sou-ht P:$$,$$$.$$ as !oral da!a-es and P:$,$$$.$$ as attorne"Gs fees.
In her )ns+er +ith Cross5clai!, Scott denied the alle-ations in the co!plaint and
alle-ed that she had no .no+led-e or an" actual participation in the e0ecution of the
deeds of sale in her favor and the 4a!ilarsGE that she onl" .ne+ of the purported
conve"ances +hen she received a cop" of the co!plaintE that her si-natures appearin-
in both deeds of sale +ere for-eriesE that +hen her authorit" to sell the land e0pired, she
had no other dealin-s +ith itE that she never received an" a!ount of !one" as alle-ed
consideration for the propert"E and that, even if she +ere the o+ner, she +ould never
have sold it at so lo+ a price.
3" +a" of Cross5clai! a-ainst S", <olpeo, 1an, and the 4a!ilars, Scott alle-ed that
+hen she +as loo.in- for a bu"er of the propert", the 4a!ilars helped her locate the
propert", and the" beca!e conversant +ith the details of the o+nership and other
particulars thereofE that onl" the other defendants +ere responsible for the see!in-
cri!inal conspirac" in defraudin- CapistranoE that in the event she +ould be held liable
to hi!, her other co5defendants should be ordered to rei!burse her of +hatever a!ount
she !a" be !ade to pa" CapistranoE that she +as entitled to P:$,$$$.$$ as !oral
da!a-es and P:$,$$$.$$ as attorne"Gs fees fro! her co5defendants due to their
fraudulent conduct.
Bater, S", <olpeo, and 1an filed a third5part" co!plaint a-ainst the <iltura spouses +ho
+ere the 4a!ilarsG alle-ed co5vendors of the sub/ect propert".
1hereafter, trial on the !erits ensued.
Subse=uentl", the trial court decided in favor of Capistrano. In its Decision dated Ma" 8,
%&&(, adoptin- the theor" of Capistrano as presented in his !e!orandu!, the trial court
rendered /ud-!ent as follo+s2
%. Declarin- plaintiff herein as the absolute o+ner of the parcel of land located at the
1ala Estate, 3a-u!bon-, Caloocan Cit" and covered b" 1C1 No. 8(;&(E
7. Orderin- defendant Re-ister of Deeds to cause the cancellation of 1C1 No. 7:%:7:
re-istered in the na!e of defendant 4osefina 4a!ilarE
#. Orderin- defendant Re-ister of Deeds to cause the cancellation of 1C1 Nos. 7(77'(
and 7(77'8 re-istered in the na!es of defendants Nelson <olpeo and 4ohn 3. 1anE
;. Orderin- defendant Re-ister of Deeds to cause the issuance to plaintiff of three *#,
ne+ 1C1s, in replace!ent of the aforesaid 1C1s Nos. 7:%:7:, 7(77'( and 7(77'8E
:. Orderin- all the private defendants in the above5captioned case to pa" plaintiff, /ointl"
and severall", the reduced a!ount of P;$$,$$$.$$ as !oral da!a-esE
(. Orderin- all the private defendants in the above5captioned case to pa" to plaintiff,
/ointl" and severall", the reduced su! of P:$,$$$.$$ as e0e!plar" da!a-esE
8. Orderin- all the private defendants in the above5captioned case to pa" plaintiffGs
counsel, /ointl" and severall", the reduced a!ount of P8$,$$$.$$ as attorne"Gs fees,
plus costs of suitE
'. Orderin- the dis!issal of defendants S", <olpeo and 1anGs Cross5Clai! a-ainst
defendant spouses 4a!ilarE
&. Orderin- the dis!issal of defendants S", <olpeo and 1anGs 1hird5Part" Co!plaint
a-ainst defendant spouses <ilturaE and
%$. Orderin- the dis!issal of the Counterclai!s a-ainst plaintiff.
SO ORDERED.
7
On appeal, the C), in its Decision dated 4ul" 7#, 7$$7, affir!ed the Decision of the trial
court +ith the !odification that the 4a!ilar spouses +ere ordered to return to S",
<olpeo, and 1an the a!ount of P%,(8&,7($.$$ representin- their full pa"!ent for the
propert", +ith le-al interest thereon fro! the date of the filin- of the co!plaint until full
pa"!ent.
Aence, this petition, +ith petitioners insistin- that the" +ere innocent purchasers for
value of the parcels of land covered b" 1C1 Nos. 7(77'( and 7(77'8. 1he" clai! that
+hen the" ne-otiated +ith the 4a!ilars for the purchase of the propert", althou-h the
title thereto +as still in the na!e of Capistrano, the docu!ents sho+n to the! U the
court order directin- the issuance of a ne+ o+nerGs duplicate cop" of 1C1 No. 8(;&(,
the ne+ o+nerGs duplicate cop" thereof, the ta0 declaration, the deed of absolute sale
bet+een Capistrano and Scott, the deed of absolute sale bet+een Scott and 4a!ilar,
27
and the real estate ta0 receipts U there +as nothin- that aroused their suspicion so as to
co!pel the! to loo. be"ond the 1orrens title. 1he" asseverated that there +as nothin-
+ron- in financin- the cancellation of CapistranoGs title and the issuance of titles to the
4a!ilars because the !one" the" spent therefor +as considered part of the purchase
price the" paid for their propert".
In their Co!!ent, the heirs of Capistrano, +ho +ere substituted after the latterGs death,
reiterated the factual circu!stances +hich should have alerted the petitioners to conduct
further investi-ation, thus U
*a, @h" the 9Deed of )bsolute Sale9 supposedl" e0ecuted b" Capistrano had re!ained
unre-istered for so lon-, i.e., fro! March &, %&'$ up to 4une %&&7, +hen the" +ere
ne-otiatin- +ith the 4a!ilars and the <ilturas for their purchase of the sub/ect propert"E
*b, @hether or not the o+nerGs cop" of CapistranoGs certificate of title had reall" been
lostE
*c, @hether Capistrano reall" sold his propert" to Scott and +hether Scott actuall" sold it
to the 4a!ilars, +hich !atters +ere easil" ascertainable as both Capistrano and Scott
+ere still alive and their na!es appear on so !an" docu!entsE
*d, @h" the consideration for both the March &, %&'$ sale and the Ma" %8, %&&$ sale
+as the sa!e *P%:$,$$$.$$,, despite the lapse of !ore than %$ "earsE
*e, @h" the price +as so lo+ *P%$.'' per s=uare !eter, both in %&'$ and in %&&$, +hen
the petitioners +ere +illin- to pa" and actuall" paid P%:$.$$ per s=uare !eter in Ma"
%&&7E and
*f, @hether or not both deeds of sale +ere authentic.
#
In addition, the heirs of Capistrano pointed out that petitioners entered into ne-otiations
over the propert", not +ith the re-istered o+ner thereof, but onl" +ith those clai!in-
o+nership thereof based on =uestionable deeds of sale.
1he petition should be denied. 1he ar-u!ents proffered b" petitioners all pertain to
factual issues +hich have alread" been passed upon b" both the trial court and the C).
indin-s of facts of the C) are final and conclusive and cannot be revie+ed on appeal,
as lon- as the" are based on substantial evidence. @hile, ad!ittedl", there are
e0ceptions to this rule such as2 *a, +hen the conclusion is a findin- -rounded entirel" on
speculations, sur!ises or con/ecturesE *b, +hen the inference !ade is !anifestl"
!ista.en, absurd or i!possibleE *c, +hen there is -rave abuse of discretionE *d, +hen
the /ud-!ent is based on a !isapprehension of factsE *e, +hen the findin-s of facts are
conflictin-E *f, +hen the C), in !a.in- its findin-s, +ent be"ond the issues of the case
and the sa!e +ere contrar" to the ad!issions of both the appellant and appellee.
;
Not
one of these e0ceptional circu!stances is present in this case.
irst. 1he C) +as correct in upholdin- the findin- of the trial court that the purported
sale of the propert" fro! Capistrano to Scott +as a for-er", and resort to a hand+ritin-
e0pert +as not even necessar" as the speci!en si-nature sub!itted b" Capistrano
durin- trial sho+ed !ar.ed variance fro! that found in the deed of absolute sale. 1he
technical procedure utili6ed b" hand+ritin- e0perts, +hile usuall" helpful in the
e0a!ination of for-ed docu!ents, is not !andator" or indispensable to the e0a!ination
or co!parison of hand+ritin-s.
:
3" the sa!e to.en, +e a-ree +ith the C) +hen it held that the deed of sale bet+een
Scott and the 4a!ilars +as also for-ed, as it noted the star. differences bet+een the
si-natures of Scott in the deed of sale and those in her hand+ritten letters to Capistrano.
Second. In findin- that the 4a!ilar spouses +ere not innocent purchasers for value of
the sub/ect propert", the C) properl" held that the" should have .no+n that the
si-natures of Scott and Capistrano +ere for-eries due to the patent variance of the
si-natures in the t+o deeds of sale sho+n to the! b" Scott, +hen Scott presented to
the! the deeds of sale, one alle-edl" e0ecuted b" Capistrano in her favor coverin- his
propert"E and the other alle-edl" e0ecuted b" Scott in favor of Capistrano over her
propert", the P;$,$$$.$$ consideration for +hich ostensibl" constituted her initial and
partial pa"!ent for the sale of CapistranoGs propert" to her.
1he C) also correctl" found the <ilturas not innocent purchasers for value, because
the" failed to chec. the veracit" of the alle-ation of 4a!ilar that he ac=uired the propert"
fro! Capistrano.
In rulin- that S" +as not an innocent purchaser for value, +e share the observation of
the appellate court that S" .ne+ that the title to the propert" +as still in the na!e of
Capistrano, but failed to verif" the clai! of the 4a!ilar spouses re-ardin- the transfer of
o+nership of the propert" b" as.in- for the copies of the deeds of absolute sale
bet+een Capistrano and Scott, and bet+een Scott and 4a!ilar. S" should have li.e+ise
in=uired +h" the <ilturas had to affi0 their confor!it" to the contract to sell b" as.in- for
a cop" of the deed of sale bet+een the 4a!ilars and the <ilturas. Aad S" done so, he
+ould have learned that the 4a!ilars clai!ed that the" purchased the propert" fro!
Capistrano and not fro! Scott.
@e also note, as found b" both the trial court and the C), 1anGs testi!on" that he,
<olpeo and S" are brothers, he and <olpeo havin- been adopted b" S"Gs father. 1an
also testified that he and <olpeo +ere priv" to the transaction bet+een S" and the
4a!ilars and the <ilturas, as sho+n b" their collective act of filin- a co!plaint for
specific perfor!ance to enforce the contract to sell.)avvp%i)
)lso note+orth" U and so!ethin- that +ould have ordinaril" aroused suspicion U is the
fact that even before the supposed e0ecution of the deed of sale b" Scott in favor of the
4a!ilars, the latter had alread" caused the subdivision of the propert" into nine *&, lots,
+ith the title to the propert" still in the na!e of Capistrano.
28
Notable li.e+ise is that the o+nerGs duplicate cop" of 1C1 No. 8(;&( in the na!e of
Capistrano had al+a"s been in his possession since he -ave Scott onl" a photocop"
thereof pursuant to the latterGs authorit" to loo. for a bu"er of the propert". On the other
hand, the 4a!ilars +ere able to ac=uire a ne+ o+nerGs duplicate cop" thereof b" filin-
an affidavit of loss and a petition for the issuance of another o+nerGs duplicate cop" of
1C1 No. 8(;&(. 1he !ini!u! re=uire!ent of a -ood faith bu"er is that the vendee of
the real propert" should at least see the o+nerGs duplicate cop" of the title.
(
) person
+ho deals +ith re-istered land throu-h so!eone +ho is not the re-istered o+ner is
e0pected to loo. be"ond the certificate of title and e0a!ine all the factual circu!stances
thereof in order to deter!ine if the vendor has the capacit" to transfer an" interest in the
land. Ae has the dut" to ascertain the identit" of the person +ith +ho! he is dealin- and
the latterGs le-al authorit" to conve".
8
inall", there is the =uestionable cancellation of the certificate of title of Capistrano
+hich resulted in the i!!ediate issuance of a certificate of title in favor of the 4a!ilar
spouses despite the clai! that Capistrano sold his propert" to Scott and it +as Scott
+ho sold the sa!e to the 4a!ilars.
In li-ht of the fore-oin- dis=uisitions, based on the evidence on record, +e find no error
in the findin-s of the C) as to +arrant a discretionar" /udicial revie+ b" this Court.
@AEREORE, the petition is DENIED DDE CODRSE for failure to establish reversible
error on the part of the Court of )ppeals. Costs a-ainst petitioners.
SO ORDERED.
#NTONO E"U#R"O (. N#C$UR#
)ssociate 4ustice
29
1AIRD DIVISION
;G.R. No. 116635. *.5/ +,, 199-<
CONC$T# NOOL %&' G#U"ENCO #LMO*ER#, petitioner, vs. COURT OF
#PPE#LS, #N#CLETO NOOL %&' EML# NE(RE,respondents.
" E C S O N
P#NG#N(#N, J.>
) contract of repurchase arisin- out of a contract of sale +here the seller did not have
an" title to the propert" QsoldR is not valid. Since nothin- +as sold, then there is also
nothin- to repurchase.
St%teme&t o@ t3e C%1e
1his postulate is e0plained b" this Court as it resolves this petition for revie+ on
certiorari assailin- the 4anuar" 7$, %&&# Decision
H%I
of Respondent Court of )ppeals
H7I
in
C)5<.R. CV No. #(;8#, affir!in- the decision
H#I
of the trial court
H;I
+hich disposed as
follo+s2
H:I
Q@AEREORE, /ud-!ent is hereb" rendered dis!issin- the co!plaint for no cause
of action, and hereb"2
%. Declarin- the private +ritin-, E0hibit VCG, to be an option to sell, not bindin-
and considered validl" +ithdra+n b" the defendants for +ant of considerationE
7. Orderin- the plaintiffs to return to the defendants the su! of P#$,$$$.$$
plus interest thereon at the le-al rate, fro! the ti!e of filin- of defendantsG
counterclai! until the sa!e is full" paidE
#. Orderin- the plaintiffs to deliver peaceful possession of the t+o hectares
!entioned in para-raph 8 of the co!plaint and in para-raph #% of defendantsG
ans+er *counterclai!,E
;. Orderin- the plaintiffs to pa" reasonable rents on said t+o hectares
at P:,$$$.$$ per annu! or at P7,:$$.$$ per croppin- fro! the ti!e of /udicial
de!and !entioned in para-raph 7 of the dispositive portion of this decision,
until the said t+o hectares shall have been delivered to the defendantsE and
:. 1o pa" the costs.
SO ORDERED.R
T3e #&te8e'e&t F%8t1
1he facts, +hich appear undisputed b" the parties, are narrated b" the Court of )ppeals
as follo+s2
Q1+o *7, parcels of land are in dispute and liti-ated upon here. 1he first has an
area of % hectare . It +as for!erl" o+ned b" Victorino Nool and covered b"
1ransfer Certificate of 1itle No. 158;&:$. @ith an area of #.$''$ hectares, the
other parcel +as previousl" o+ned b" rancisco Nool under 1ransfer Certificate of
1itle No. 15%$$&;:. 3oth parcels are situated in San Manuel, Isabela. 1he plaintiff
spouses, Conchita Nool and <audencio )l!o/era, no+ the appellants, see.
recover" of the afore!entioned parcels of land fro! the defendants, )nacleto Nool,
a "oun-er brother of Conchita, and E!ilia Nebre, no+ the appellees.
In their co!plaint, plaintiff5appellants alle-ed inter alia that the" are the o+ners of
sub/ect parcels of land, and the" bou-ht the sa!e fro! ConchitaGs other brothers,
Victorino Nool and rancisco NoolE that as plaintiffs +ere in dire need of !one", the"
obtained a loan fro! the Ili-an 3ranch of the Develop!ent 3an. of the Philippines, in
Ila-an, Isabela, secured b" a real estate !ort-a-e on said parcels of land, +hich +ere
still re-istered in the na!es of Victorino Nool and rancisco Nool, at the ti!e, and for
the failure of plaintiffs to pa" the said loan, includin- interest and surchar-es,
totalin- P:(,$$$.$$, the !ort-a-e +as foreclosedE that +ithin the period of rede!ption,
plaintiffs contacted defendant )nacleto Nool for the latter to redee! the foreclosed
properties fro! D3P, +hich the latter didE and as a result, the titles of the t+o *7, parcels
of land in =uestion +ere transferred to )nacleto NoolE that as part of their arran-e!ent
or understandin-, )nacleto Nool a-reed to bu" fro! the plaintiff Conchita Nool the t+o
*7, parcels of land under controvers", for a total price of P%$$,$$$.$$, P#$,$$$.$$ of
+hich price +as paid to Conchita, and upon pa"!ent of the balance of P%;,$$$.$$,
plaintiffs +ere to re-ain possession of the t+o *7, hectares of land, +hich a!ounts
defendants failed to pa", and the sa!e da" the said arran-e!ent
H(I
+as !adeE another
covenant
H8I
+as entered into b" the parties, +hereb" defendants a-reed to return to
plaintiffs the lands in =uestion, at an"ti!e the latter have the necessar" a!ountE that
plaintiffs as.ed the defendants to return the sa!e but despite the intervention of the
3aran-a" Captain of their place, defendants refused to return the said parcels of land to
plaintiffsE thereb" i!pellin- the! *plaintiffs, to co!e to court for relief.
In their ans+er defendants5appellees theori6ed that the" ac=uired the lands in
=uestion fro! the Develop!ent 3an. of the Philippines, throu-h ne-otiated sale,
and +ere !isled b" plaintiffs +hen defendant )nacleto Nool si-ned the private
+ritin- a-reein- to return sub/ect lands +hen plaintiffs have the !one" to redee!
the sa!eE defendant )nacleto havin- been !ade to believe, then, that his sister,
Conchita, still had the ri-ht to redee! the said properties.
30
1he pivot of in=uir" here, as aptl" observed belo+, is the nature and si-nificance of
the private docu!ent, !ar.ed E0hibit VDG for plaintiffs, +hich docu!ent has not
been denied b" the defendants, as defendants even averred in their )ns+er that
the" -ave an advance pa"!ent of P#$,$$$.$$ therefor, and ac.no+led-ed that
the" had a balance of P%;,$$$.$$ to co!plete their pa"!ent. On this crucial issue,
the lo+er court ad/ud-ed the said private +ritin- *E0hibit VDG, as an option to sell not
bindin- upon and considered the sa!e validl" +ithdra+n b" defendants for +ant of
considerationE and decided the case in the !anner above!entioned.
1here is no =uibble over the fact that the t+o *7, parcels of land in dispute +ere
!ort-a-ed to the Develop!ent 3an. of the Philippines, to secure a loan obtained b"
plaintiffs fro! D3P *Ila-an 3ranch,, Ila-an, Isabela. or the non5pa"!ent of said loan,
the !ort-a-e +as foreclosed and in the process, o+nership of the !ort-a-ed lands +as
consolidated in D3P *E0hibits # and ; for defendants,. )fter D3P beca!e the absolute
o+ner of the t+o parcels of land, defendants ne-otiated +ith D3P and succeeded in
bu"in- the sa!e. 3" virtue of such sale b" D3P in favor of defendants, the titles of D3P
+ere cancelled and correspondin- 1ransfer Certificates of 1itle *)nne0es VCG and VDG to
the co!plaint, issued to the dependants.R
H'I
It should be stressed that Manuel S. Mallorca, authori6ed officer of D3P, certified that
the one5"ear rede!ption period +as fro! March %(, %&'7 up to March %:, %&'# and that
the Mort-a-orsG ri-ht of rede!ption +as not e0ercised +ithin this period.
H&I
Aence, D3P
beca!e the absolute o+ner of said parcels of land for +hich it +as issued ne+
certificates of title, both entered on Ma" 7#, %&'# b" the Re-istr" of Deeds for the
Province of Isabela.
H%$I
)bout t+o "ears thereafter, on )pril %, %&':, D3P entered into a
Deed of Conditional Sale
H%%I
involvin- the sa!e parcels of land +ith Private Respondent
)nacleto Nool as vendee. Subse=uentl", the latter +as issued ne+ certificates of title on
ebruar" ', %&''.
H%7I
1he Court of )ppeals ruled2
H%#I
Q@AEREORE, findin- no reversible error infir!in- it, the appealed 4ud-!ent is
hereb" )IRMED in toto. No pronounce!ent as to costs.R
T3e 11.e1
Petitioners i!pute to Respondent Court the follo+in- alle-ed QerrorsR2
Q%. 1he Aonorable Court of )ppeals, Second Division has !isapplied the le-al
i!port or !eanin- of E0hibit VCG in a +a" contrar" to la+ and e0istin- /urisprudence
in statin- that it has no bindin- effect bet+een the parties and considered validl"
+ithdra+n b" defendants5appellees for +ant of consideration.
7. 1he Aonorable Court of )ppeals, Second Division has !iserabl" failed to
-ive le-al si-nificance to the actual possession and cultivation and appropriatin-
e0clusivel" the pala" harvest of the t+o *7, hectares land pendin- the pa"!ent of
the re!ainin- balance of fourteen thousand pesos *P%;,$$$.$$, b" defendants5
appellees as indicated in E0hibit VCG.
#. 1he Aonorable Court of )ppeals has seriousl" erred in affir!in- the decision of
the lo+er court b" a+ardin- the pa"!ent of rents per annu! and the return
of P#$,$$$.$$ and not allo+in- the plaintiffs5appellants to re5ac=uire the four *;,
hectares, !ore or less upon pa"!ent of one hundred thousand pesos *P%$$,$$$.$$, as
sho+n in E0hibit VDG.R
H%;I
T3e Co.rtA1 R.52&B
1he petition is bereft of !erit.
F2r1t 11.e> Are Exhibits C and D Valid and Enforeable!
1he petitioner5spouses plead for the enforce!ent of their a-ree!ent +ith private
respondents as contained in E0hibits QCR and QD,R and see. da!a-es for the latterGs
alle-ed breach thereof. In E0hibit C, +hich +as a private hand+ritten docu!ent labeled
b" the parties as Resibo ti Gatulagan or Receipt of )-ree!ent, the petitioners appear to
have QsoldR to private respondents the parcels of land in controvers" covered b" 1C1
No. 158;&:$ and 1C1 No. 15%$$&;:. On the other hand, E0hibit D, +hich +as also a
private hand+ritten docu!ent in Ilocano and labeled as Gasuratan, private respondents
a-reed that Conchita Nool Qcan ac=uire bac. or repurchase later on said land +hen she
has the !one".R
H%:I
In see.in- to enforce her alle-ed ri-ht to repurchase the parcels of land, Conchita
*/oined b" her co5petitioner5husband, invo.es )rticle %#8$ of the Civil Code +hich
!andates that Q*i,f the ter!s of a contract are clear and leave no doubt upon the
intention of the contractin- parties, the literal !eanin- of its stipulation shall
control.R Aence, petitioners contend that the Court of )ppeals erred in affir!in- the trial
courtGs findin- and conclusion that said E0hibits C and D +ere Qnot !erel" voidable but
utterl" void and ine0istent.R
@e cannot sustain petitionersG vie+. )rticle %#8$ of the Civil Code is applicable onl"
to valid and enforceable contracts. 1he Re-ional 1rial Court and the Court of )ppeals
ruled that the principal contract of sale contained in E0hibit C and the au0illiar" contract
of repurchase in E0hibit D are both void. 1his conclusion of the t+o lo+er courts
appears to find support in ,ignos vs. Court of Appeals,
H%(I
+here the Court held2
Q3e that as it !a", it is evident that +hen petitioners sold said land to the Cabi-as
spouses, the" +ere no lon-er o+ners of the sa!e and the sale is null and void.R
In the present case, it is clear that the sellers no lon-er had an" title to the parcels of
land at the ti!e of sale. Since E0hibit D, the alle-ed contract of repurchase, +as
31
dependent on the validit" of E0hibit C, it is itself void. ) void contract cannot -ive rise to
a valid one.
H%8I
Veril", )rticle %;77 of the Civil Code provides that Q*a, contract +hich is
the direct result of a previous ille-al contract, is also void and ine0istent.R
@e should ho+ever add that ,ignos did not cite its basis for rulin- that a Qsale is null
and voidR +here the sellers Q+ere no lon-er the o+nersR of the propert". Such a
situation *+here the sellers +ere no lon-er o+ners, does not appear to be one of the
void contracts enu!erated in )rticle %;$& of the Civil Code.
H%'I
Moreover, the Civil
Code
H%&I
itself reco-ni6es a sale +here the -oods are to be Qac=uired 0 0 0 b" the seller
after the perfection of the contract of sale,R clearl" i!pl"in- that a sale is possible even if
the seller +as not the o+ner at the ti!e of sale, provided he ac=uires title to the propert"
later on.
In the present case ho+ever, it is li.e+ise clear that the sellers can no lon-er deliver the
ob/ect of the sale to the bu"ers, as the bu"ers the!selves have alread" ac=uired title
and deliver" thereof fro! the ri-htful o+ner, the D3P. 1hus, such contract !a" be
dee!ed to be inoperative
H7$I
and !a" thus fall, b" analo-", under ite! no. : of )rticle
%;$& of the Civil Code2 Q1hose +hich conte!plate an i!possible service.R )rticle %;:&
of the Civil Code provides that Qthe vendor !ust have a ri-ht to transfer the o+nership
thereof Hob/ect of the saleI at the ti!e it is delivered.R Aere, deliver" of o+nership is no
lon-er possible. It has beco!e i!possible.
urther!ore, )rticle %:$: of the Civil Code provides that Q+here -oods are sold b" a
person +ho is not the o+ner thereof, and +ho does not sell the! under authorit" or +ith
consent of the o+ner, the bu"er ac=uires no better title to the -oods than the seller had,
unless the o+ner of the -oods is b" his conduct precluded fro! den"in- the sellerGs
authorit" to sell.R Aere, there is no alle-ation at all that petitioners +ere authori6ed b"
D3P to sell the propert" to the private respondents. 4urisprudence, on the other hand,
teaches us that Qa person can sell onl" +hat he o+ns or is authori6ed to sellE the bu"er
can as a conse=uence ac=uire no !ore than +hat the seller can le-all" transfer.R
H7%I
No
one can -ive +hat he does not have U neno dat quod non %abet. On the other hand,
E0hibit D presupposes that petitioners could repurchase the propert" that the" QsoldR to
private respondents. )s petitioners QsoldR nothin-, it follo+s that the" can also
VrepurchaseR nothin-. Nothin- sold, nothin- to repurchase. In this li-ht, the contract of
repurchase is also inoperative U and b" the sa!e analo-", void.
Contrat of "ep#rhase
Dependent on Validity of $ale
)s borne out b" the evidence on record, the private respondents bou-ht the t+o parcels
of land directl" fro! D3P on )pril %, %&': after discoverin- that petitioners did not o+n
said propert", the sub/ect of E0hibits C and D e0ecuted on Nove!ber #$,
%&';. Petitioners, ho+ever, clai! that the" can e0ercise their alle-ed ri-ht to
QrepurchaseR the propert", after private respondents had ac=uired the sa!e fro! D3P.
H77I
@e cannot accede to this, for it clearl" contravenes the intention of the parties and
the nature of their a-ree!ent. E0hibit D reads2
C: R T N G
Nov. #$, %&';
1hat I, )nacleto Nool have bou-ht fro! !" sister Conchita Nool a land an area of
four hectares *; has., in the value of One Aundred 1housand *%$$,$$$.$$,
Pesos. It is our a-ree!ent as brother and sister that she can ac=uire bac. or
repurchase later on said land +hen she has the !one". HDnderscorin- suppliedI
)s proof of this a-ree!ent +e si-n as brother and sister this +ritten docu!ent this
da" of Nov. #$, %&';, at District ;, San Manuel, Isabela.
S-d )N)CBE1O NOOB

)nacleto Nool
S-d E!ilio Paron
@itness
S-d C
onchita Nool
Co
nchita NoolR
H7#I
One QrepurchasesR onl" +hat one has previousl" sold. In other +ords, the ri-ht to
repurchase presupposes a valid contract of sale bet+een
the sa4e parties. Dndisputedl", private respondents ac=uired title to the propert" fro!
D3P, and not fro! the petitioners.
)ssu!in- arguendo that E0hibit D is separate and distinct fro! E0hibit C and is not
affected b" the nullit" of the latter, still petitioners do not thereb" ac=uire a ri-ht to
repurchase the propert". In that scenario, E0hibit D ceases to be a Qri-ht to repurchaseR
ancillar" and incidental to the contract of saleE rather, it beco!es an accepted unilateral
pro!ise to sell. )rticle %;8& of the Civil Code, ho+ever, provides that Qan accepted
unilateral pro!ise to bu" or sell a deter!inate thin- for a price certain is bindin- upon
the pro!issor if the pro!ise is supported b" a consideration distinct fro! the price.R In
the present case, the alle-ed +ritten contract of repurchase contained in E0hibit D is
bereft of an" consideration distinct fro! the price. )ccordin-l", as an independent
contract, it cannot bind private respondents. 1he rulin- in ,ia4ante vs. CA
H7;I
supports
this. In that case, the Court throu-h Mr. 4ustice Ailario <. Davide, 4r. e0plained2
Q)rticle %($% of the Civil Code provides2
VConventional rede!ption shall ta.e place +hen the vendor reserves the ri-ht
to repurchase the thin- sold, +ith the obli-ation to co!pl" +ith the provisions
of article %(%( and other stipulations +hich !a" have been a-reed upon.R
32
In Villarica, et al. Vs. Court of )ppeals, et al., decided on 7& Nove!ber %&(',
or barel" seven *8, da"s before the respondent Court pro!ul-ated its
decisions in this case, this Court, interpretin- the above )rticle, held2
Q1he ri-ht of repurchase is not a ri-ht -ranted the vendor b" the vendee in a
subse=uent instru!ent, but is a ri-ht reserved b" the vendor in the sa!e
instru!ent of sale as one of the stipulations of the contract. Once the
instru!ent of absolute sale is e0ecuted, the vendor can not lon-er reserve the
ri-ht to repurchase, and an" ri-ht thereafter -ranted the vendor b" the vendee
in a separate instru!ent cannot be a ri-ht of repurchase but so!e other ri-ht
li.e the option to bu" in the instant case. 0 0 0.R
In the earlier case of Ra!os, et al. vs. Icasiano, et al., decided in %&78, this
Court had alread" ruled that Qan a-ree!ent to repurchase beco!es a pro!ise
to sell +hen !ade after the sale, because +hen the sale is !ade +ithout such
an a-ree!ent, the purchaser ac=uires the thin- sold absolutel", and if he
after+ards -rants the vendor the ri-ht to repurchase, it is a ne+ contract
entered into b" the purchaser, as absolute o+ner alread" of the ob/ect. In that
case the vendor has nor reserved to hi!self the ri-ht to repurchase.G
In Vda. De Cru6o, et al. vs. Carria-a, et al. this Court found another occasion
to appl" the fore-oin- principle.
Aence, the Option to Repurchase e0ecuted b" private respondent in the present
case, +as !erel" a pro!ise to sell, +hich !ust be -overned b" )rticle %;8& of the
Civil Code +hich reads as follo+s2
Q)rt. %;8&. U ) pro!ise to bu" and sell a deter!inate thin- for a price certain
is reciprocall" de!andable.
V)n accepted unilateral pro!ise to bu" or to sell a deter!inate thin- for a price
certain is bindin- upon the pro!issor if the pro!ise is supported b" a
consideration distinct fro! the price.GR
"ight to "ep#rhase %ased on
&omestead or 'r#st (on)Existent
Petitioners also base their alle-ed ri-ht to repurchase on *%, Sec. %%& of the Public Band
)ct
H7:I
and *7, an i!plied trust relation as Qbrother and sister.R
H7(I
1he Court notes that Victorino Nool and rancisco Nool !ort-a-ed the land to
D3P. 1he brothers, to-ether +ith Conchita Nool and )nacleto Nool, +ere all siblin-s
and heirs =ualified to repurchase the t+o parcels of land under Sec. %%& of the Public
Band )ct +hich provides that Q*e,ver" conve"ance of land ac=uired under the free patent
or ho!estead provisions, +hen proper, shall be sub/ect to repurchase b" the applicant,
his +ido+ or le-al heirs, +ithin a period of five "ears fro! the date of
conve"ance.R )ssu!in- the applicabilit" of this statutor" provision to the case at bar, it
is indisputable that Private Respondent )nacleto Nool alread" repurchased fro! D3P
the contested properties. Aence, there +as no !ore ri-ht of repurchase that his sister
Conchita or brothers Victorino and rancisco could e0ercise. 1he properties +ere
alread" o+ned b" an heir of the ho!estead -rantee and the rationale of the of the
provision to .eep ho!estead lands +ithin the fa!il" of the -rantee +as thus fulfilled.
H78I
1he clai! of a trust relation is li.e+ise +ithout !erit. 1he records sho+ that private
respondents did not purchase the contested properties fro! D3P in trust for
petitioners. 1he for!er, as previousl" !entioned, in fact bou-ht the land fro! D3P
upon reali6ation that the latter could not validl" sell the sa!e. Obviousl", petitioners
bou-ht it for the!selves. 1here is no evidence at all in the records that the" bou-ht the
land in trust for private respondents. 1he fact that )nacleto Nool +as the "oun-er
brother of Conchita Nool and that the" si-ned a contract of repurchase, +hich as
discussed earlier +as void, does not prove the e0istence of an i!plied trust in favor of
petitioners.
Se8o&' 11.e> (o Estoppel in *mp#gning the
Validity of Void Contrats
Petitioners ar-ue that Q+hen )nacleto Nool too. the possession of the t+o hectares,
!ore or less, and let the other t+o hectares to be occupied and cultivated b" plaintiffs5
appellants, )nacleto Nool cannot later on disclai! the ter!s or contions *sic, a-reed
upon and his actuation is +ithin the a!bit of estoppel 0 0 0.R
H7'I
@e disa-ree. 1he private
respondents cannot be estopped fro! raisin- the defense of nullit" of contract, speciall"
in this case +here the" acted in -ood faith, believin- that indeed petitioners could sell
the t+o parcels of land in =uestion. )rticle %;%$ of the Civil Code !andates that Q*t,he
action or defense for the declaration of the ine0istence of a contract does not
prescribe.R It is +ell5settled doctrine that Qas bet+een parties to a contract, validit"
cannot be -iven to it b" estoppel if it is prohibited b" la+ or it is a-ainst public polic" *%&
)!. 4ur. '$7,. It is not +ithin the co!petence of an" citi6en to barter a+a" +hat public
polic" b" la+ see.s to preserve.R
H7&I
1hus, it is i!!aterial that private respondents initiall"
acted to i!ple!ent the contract of sale, believin- in -ood faith that the sa!e +as
valid. @e stress that a contract void at inception cannot be validated b" ratification or
prescription and certainl" cannot be bindin- on or enforceable a-ainst private
respondents.
H#$I
T32r' 11.e> "et#rn of +,-,---.-- .ith *nterest
and +ayment of "ent
Petitioners further ar-ue that it +ould be a Q!iscarria-e of /usticeR to order the! *%, to
return the su! of P#$,$$$.$$ to private respondents +hen alle-edl" it +as Private
Respondent )nacleto Nool +ho o+ed the for!er a balance of P%;,$$$.$$ and *7, to
order petitioners to pa" rent +hen the" Q+ere allo+ed to cultivate the said t+o
hectares.R
H#%I
33
@e are not persuaded. 3ased on the previous discussion, the balance of P%;,$$$.$$
under the void contract of sale !a" not be enforced. Petitioners are the ones +ho have
an obli-ation to return +hat the" undul" and i!properl" received b" reason of the invalid
contract of sale. Since the" cannot le-all" -ive title to +hat the" Qsold,R the" cannot
.eep the !one" paid for the ob/ect of the sale. It is basic that Q*e,ver" person +ho
throu-h an act of perfor!ance b" another, or an" other !eans, ac=uires or co!es into
possession of so!ethin- at the e0pense of the latter +ithout /ust or le-al -round, shall
return the sa!e.R
H#7I
1hus, if a void contract has alread" Qbeen perfor!ed, the restoration
of +hat has been -iven is in order.R
H##I
Corollaril" and as aptl" ordered b" respondent
appellate court, interest thereon +ill run onl" fro! the ti!e of private respondentsG
de!and for the return of this a!ount in their counterclai!.
H#;I
In the sa!e vein,
petitionersG possession and cultivation of the t+o hectares are anchored on private
respondentsG tolerance. Clearl", the latterGs tolerance ceased upon their counterclai!
and de!and on the for!er to vacate. Aence, their ri-ht to possess and cultivate the
land ipso facto ceased.
:$EREFORE, the petition is DENIED and the assailed Decision of the Court of )ppeals
affir!in- that of the trial court is hereb" )IRMED.
SO OR"ERE".
34
Republic of the Philippines
SUPREME COURT
Manila
EN 3)NC
G.R. No. L-30,,+ September 30, 1983
$ONOR#(LE CORNELO (#LM#CE"#, &oD LEON"ES !R#T#, 2& 321 8%p%82t/
%1 Se8retr%r/ o@ Commer8e %&' &'.1tr/, petitioner,
vs.
UNON C#R("E P$LPPNES, NC., $ONOR#(LE FE"ERCO C. #L6P#L#,
Pre12'2&B *.'Be, (r%&83 EE, Co.rt o@ F2r1t &1t%&8e o@ M%&25%, respondents.
G.R. No. L-30,09 September 30, 1983
$ONOR#(LE M#RCELO (#L#T(#T, 2& 321 8%p%82t/ %1 Se8ret%r/ o@ Commer8e
%&' &'.1tr/, petitioner,
vs.
UNON C#R("E P$LPPNES, NC., respondent.
B%e olicitor *eneral for petitioner.
*il R. Carlos for respondents.

FERN#N"O, C.J.:
1he =uestion raised in this petition filed b" the Solicitor <eneral to revie+ the decision of
then respondent 4ud-e, the late ederico C. )li.pala declarin- that private respondent
Dnion Carbide of the Philippines is not en-a-ed in the retail business does not pose an"
difficult". 1he ans+er is supplied b" the case of =. -. *oodric% '%ilippines, <nc. v.
Beofilo Reyes, r.,
1
*oodyear Bire and Rubber Co. v. Beofilo Reyes, r.,
+
and !obil
Oil '%ilippines, <nc. v. Beofilo Reyes, r.
3
1he doctrine therein announced appl"in- the
Presidential Decree
,
a!endin- the Retail 1rade )ct
5
is directl" in point. 1he decision
calls for affir!ance.
1he a!endator" Presidential Decree added t+o !ore para-raphs, the first of +hich +as
the basis for the three previous decisions of this Court. 1he entire section ; +as
reproduced. 1he Section starts +ith an openin- state!ent as to +hat the ter! 9retail
business9 shall !ean, na!el",
6
9occupation or callin- of habituall" sellin- direct to the
-eneral public !erchandise, co!!odities or -oods for consu!ption.9 ( It e0cludes,
accordin- to the a!end!ent, 9*c, a !anufacturer or processor sellin- to the industrial
and co!!ercial users or consu!ers +ho use the products bou-ht b" the! to render
service to the -eneral public and?or produce or !anufacture -oods +hich are in turn
sold to the!E... 9
-
1he appealed decision, +hich is =uite co!prehensive and scholarl",
could be co!!ended for in the !ain anticipatin- that the above cate-or" should be
e0cluded fro! 9retail business.9 1hus2 9In the field of econo!ics, in the area of
!ar.etin-, the interpretation -iven b" <overn!ent a-encies, and b" co!!on
acceptation the ter! CretailC, is associated +ith and li!ited to -oods for personal, fa!il"
or household use, consu!ption and utili6ation. 1his is also in accord +ith the rulin- of
the Supre!e Court in the Ichon- case re-ardin- the nature and .ind of -oods a retailer
handles. Dnder the situation, the Court is persuaded to hold that the -oods for
consu!ption !entioned in Republic )ct No. %%'$ should be construed to refer to the
final and end HusesI of a product +hich directl" satisf" hu!an +ants and desires and are
needed for ho!e and dail" life. )ccordin-l", the -oods +hich petitionerCs Industrial
Products Division handle *co!!onl" referred to as inter!ediate -oods,, do not fall and
cannot be classified as consu!ption -oods.9
8
1here +as a need for such clarification. Private respondent has t+o divisions, the
Consu!er Products Division and the Industrial Products Division. )s to the for!er, it
effected its sales throu-h retail outlets, dealers and distributors. 1hus there +as no
=uestion as to the character of its business. It +as not e!braced in the cate-or" of
retail. )s to the Industrial Products Division, its )-ricultural Che!icals Depart!ent sold
its products throu-h e0clusive distributors. )-ain, it could be concluded that such
Depart!ent +as not covered b" the )ct even before its a!end!ent. 1he products
handled b" the five other depart!ents of the Industrial Products Division, na!el", the
Metals and CarbideE PlasticsE Industrial Che!icalsE Binde, Aa"nes Stellite and Carbon
Products and Pol"eth"lene 3a-s +ere -enerall" sold to producers, processors,
fabricators and to industries. @hile these depart!ents had a li!ited fi0ed clientele, still
there +as no prohibition as to the -eneral public !altin- si!ilar purchases fro! the!.
@hat re!oved these depart!ents fro! the operation of the Retail 1rade )ct +as
pointed out in the appealed decision in these +ords2 91he -oods handled b" the five
re!ainin- depart!ents of petitionerCs Industrial Products Division are -enerall" ra+
!aterials used in the !anufacture of other -oods, or if not, as one of the co!ponent ra+
!aterials, or at the least as ele!ents utili6ed in the process of production or
!anufacturin-.9
9
)fter considerin- the statutor" definition in the Retail 1rade )ct itself,
its definition b" econo!ists, and in /udicial opinions, as +ell as the vie+ of for!er
Central 3an. <overnor Cuaderno as to the adverse conse=uences in ter!s of increased
cost to consu!ers, loss of official assistance fro! producers, eli!ination of !uch
needed forei-n capital and loss of technical assistance, the lo+er court held it +as not
en-a-ed in the retail business. 1he a!endator" Decree re!oves +hatever doubt there
could have been as to the correctness of the conclusion reached b" the lo+er court.
@AEREORE, the Court affir!s the lo+er court decision holdin- that Dnion Carbide
Philippines, Inc. is not en-a-ed in the 9retail business9 as this ter! is defined in Section
; of Republic )ct No. %%'$ and !altin- per!anent the restrainin- order of 4une 77,
%&(; issued in this case. No costs.
35
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-195,5 #pr25 18, 19-5
P$LPPNE SU(UR(#N "E!ELOPMENT CORPOR#TON, petitioner,
vs.
T$E #U"TOR GENER#L, PE"RO M. GMENE0, respondent.
!agno L. ,a>ao for petitioner.
-irst Assistant olicitor *eneral 9s4eraldo C4ali and olicitor u4ilang +. =ernardo
for respondent.

#NTONO, J.:/01.23.ph45
)ppeal b" certiorari fro! the decision dated Dece!ber %%, %&(%, of then )uditor
<eneral Pedro M. <i!ene6, disallo+in- the re=uest of petitioner for the refund of real
estate ta0 in the a!ount of P#$,;($.&$ paid to the Provincial 1reasurer of 3ulacan.
1he facts of the case are as follo+s2
On 4une ', %&($, at a !eetin- +ith the Cabinet, the President of the Philippines, actin-
on the reports of the Co!!ittee created to surve" suitable lots for relocatin- s=uatters in
Manila and suburbs, and of the Social @elfare )d!inistrator to-ether +ith the
reco!!endation of the Mana-er of the <overn!ent Service Insurance S"ste!,
approved in principle the ac=uisition b" the PeopleCs Ao!esite and Aousin- Corporation
of the unoccupied portion of the Sapan- Pala" Estate in Sta. Maria, 3ulacan for
relocatin- the s=uatters +ho desire to settle north of Manila, and of another area either
in Bas PiMas or ParaMa=ue, Ri6al, or 3acoor, Cavite for those +ho desire to settle south
of Manila. 1he pro/ect +as to be financed throu-h the flotation of bonds under the
charter of the PAAC in the a!ount of P;.: !illion, the sa!e to be absorbed b" the
<overn!ent Service Insurance S"ste!. 1he President, throu-h the E0ecutive
Secretar", infor!ed the PAAC of such approval b" letter bearin- the sa!e date *)nne0
939,.
On 4une %$, %&($, the 3oard of Directors of the PAAC passed Resolution No. 8$$
*)nne0 9C9, authori6in- the purchase of the unoccupied portion of the Sapan- Pala"
Estate at P$.;: per s=uare !eter 9sub/ect to the follo+in- conditions precedent2 tH?.
IJ%qwKI
%. 1hat the confir!ation b" the OEC and the President of the purchase price of P$.;:
per s=. !. shall first be secured, pursuant to OEC Me!orandu! Circular No. %%;, dated
Ma" (, %&:8.
7. 1hat the portion of the estate to be ac=uired shall first be defined and delineated.
#. 1hat the President of the Philippines shall first provide the PAAC +ith the necessar"
funds to effect the purchase and develop!ent of this propert" fro! the proposed P;.:
!illion bond issue to be absorbed b" the <SIS.
;. 1hat the contract of sale shall first be approved b" the )uditor <eneral pursuant to
E0ecutive Order dated ebruar" #, %&:&.
:. 1he vendor shall a-ree to the dis!issal +ith pre/udice of Civil Case No. F5###7 C..I.
Fue6on Cit", entitled 9Phil. Suburban Dev. Corp. V. Orti6, et al.9
On 4ul" %#, %&($, the President authori6ed the floatin- of bonds under Republic )ct
Nos. %$$$ and %#77 in the a!ount of P8,:$$,$$$.$$ to be absorbed b" the <SIS, in
order to finance the ac=uisition b" the PAAC of the entire Sapan- Pala" Estate at a
price not to e0ceed P$.;: per s=. !eter.
On Dece!ber 7&,%&($, after an e0chan-e of co!!unications, Petitioner Philippine
Suburban Develop!ent Corporation, as o+ner of the unoccupied portion of the Sapan-
Pala" Estate *specificall" t+o parcels covered b" 1C1 Nos. 157#'$8 and 157#'$',, and
the PeopleCs Ao!esite and Aousin- Corporation, entered into a contract e!bodied in a
public instru!ent entitled 9Deed of )bsolute Sale9 *)nne0 99, +hereb" the for!er
conve"ed unto the latter the t+o parcels of land above!entioned, under the follo+in-
ter!s and conditions, a!on- others2 tH?.IJ%qwKI
%. 1hat for and in consideration of the su! of 1AREE MIBBION 1AREE ADNDRED
EI<A1>5SIS 1AODS)ND 1@O ADNDRED 1@EN1> 1AREE *P#,#'(,77#.$$, PESOS,
Philippine currenc", to be paid b" the VENDEE to the herein VENDOR in the !anner
outlined hereinbelo+, the VENDOR b" these presents does hereb" sell, transfer and
conve" b" +a" of absolute sale unto the VENDEE, its successors, ad!inistrators or
assi-ns, the above described t+o *7, parcels of land, to-ether +ith all the i!prove!ents
e0istin- thereonE
7. 1hat the pa"!ent of the consideration !entioned in para-raph % above shall be !ade
as follo+s2
36
*a, 1he vendee is presentl" ne-otiatin- or securin- fro! the <OVERNMEN1 SERVICE
INSDR)NCE S>S1EM, b" virtue of a directive of the President of the Philippines, a loan
for the purchase of the above described t+o *7, parcels of land in anticipation of the
purchase b" the said <OVERNMEN1 SERVICE INSDR)NCE S>S1EM of the bonds to
be floated b" the National <overn!ent to enable the VENDEE to !a.e this purchase,
and fro! +hatever a!ount !a" be -ranted as loan b" the <OVERNMEN1 SERVICE
INSDR)NCE S>S1EM to the VENDEE, ONE MIBBION SEVEN ADNDRED 1EN
1AODS)ND *P%,8%$,$$$.$$, PESOS shall be retained b" the said VENDEE for the
purpose of pa"in- and clearin- the e0istin- lien annotated at the bac. of the aforesaid
1ransfer Certificates of 1itle Nos. 157#'$8 and 157#'$', said pa"!ent to be !ade
directl" to the MOR1<)<EES and the difference shall be paid to the VENDOR,
provided that this first pa"!ent shall not be less than ONE MIBBION SEVEN ADNDRED
1EN 1AODS)ND *P%,8%$,$$$.$$, PESOS and the VENDOR is hereb" constituted as
)ttorne"5in5fact and authori6ed to receive fro!, and the <OVERNMEN1 SERVICE
INSDR)NCE S>S1EM is directed to pa" the balance of the loan direct to the herein
VENDOR char-eable a-ainst VENDEECs loan fro! the <OVERNMEN1 SERVICE
INSDR)NCE S>S1EME provided, ho+ever, 1hat should this a!ount be !ore than
sufficient to cover the said !ort-a-e lien, the VENDEE shall pa" the difference to the
VENDORE and provided, further, 1hat the VENDOR shall ta.e char-e of the preparation
and re-istration of the docu!ents necessar" in clearin- the above referred to !ort-a-e
lien, +ith the understandin- that the e0penses for preparation, notari6ation, re-istration,
includin- docu!entar" sta!ps, and other e0penses for the cancellation of said
!ort-a-e lien shall be for the account of the VENDOR and shall be advanced b" the
VENDEE to the VENDORE
*b, 1hat out of the su! of P%,8%$,$$$.$$ to be retained b" the VENDEE !entioned in
the i!!ediatel" precedin- para-raph 7*a, for the purpose of dischar-in- the said
!ort-a-e lien, the VENDEE shall deduct and further retain or .eep as a trust fund the
a!ount of OR1> 1AODS)ND *P;$,$$$, PESOS, Philippine Currenc", to ans+er for
the re!ainin- Notice of Bis Pendens annotated at the bac. of 1ransfer Certificate of 1itle
Nos. 157#'$8 and 157#'$' until such lien shall have been dischar-ed or cancelled, the
VENDEE bindin- itself to deliver forth+ith the said a!ount of P;$,$$$.$$ unto the
successful part" involved in said Notice of Bis PendensE
*c, 1he re!ainin- balance of the total consideration in the a!ount of ONE MIBBION SIS
ADNDRED SEVEN1>5SIS 1AODS)ND 1@O ADNDRED 1@EN1>51AREE PESOS
*P%,(8(,77#.$$,, Philippine Currenc", or +hatever a!ount is not paid b" virtue of the
first pa"!ent !entioned in para-raph *a, above, shall be paid b" the VENDEE unto the
VENDOR i!!ediatel" upon the VENDEECs obtainin- sufficient funds fro! proceeds of
bonds floated b" the VENDEE or the <overn!ent for the purchase of the properties
sub/ect of this transactionE provided, ho+ever, 1hat full and co!plete pa"!ent of the
balance !entioned in this particular para-raph 7*c, shall be !ade or paid b" the
VENDEE +ithin a period of si0t" *($, da"s fro! date of deliver" of title b" the VENDOR
in the na!e of the VENDEEE and provided, further, 1hat this si0t" *($, da"s period !a"
be e0tended for another period of si0t" *($, da"s upon +ritten re=uest b" the VENDEE
at least five *:, da"s prior to the e0piration of the said si0t" *($, da"s period. Should
there be instituted an" le-al action, ho+ever, for the collection of an" a!ounts due fro!
the VENDEE in favor of the VENDOR, the VENDEE binds itself to pa" unto the
VENDOR a su! e=uivalent to t+ent"5five *7:N, per centu! of the total balance due
fro! the, VENDEE in favor of the VENDOR as and b" +a" of attorne"Cs fees, and the
costs of suitE
#. 1hat the VENDOR hereb" +arrants to defend the title and o+nership of the VENDEE
to the t+o *7, parcels of land above described fro! an" clai! or clai!s of third parties
+ho!soeverE
*;., 1hat all e0penses for the preparation and notari6ation of this docu!ent shall be for
the account of the VENDORE provided, ho+ever, 1hat re-istration and issuance of
certificates of title in the na!e of the VENDEE shall be for the account of the VENDEE.9
*)nne0 99,
1he above docu!ent +as not re-istered in the Office of the Re-ister of Deeds until
March %;, %&(%, due to the fact, petitioner clai!s, that the PAAC could not at once
advance the !one" needed for re-istration e0penses. In the !eanti!e, the )uditor
<eneral, to +ho! a cop" of the contract had been sub!itted for approval in confor!it"
+ith E0ecutive Order No. 7&$, e0pressed ob/ections thereto and re=uested a re5
e0a!ination of the contract, in vie+ of the fact that fro! %&;' to Dece!ber 7$, %&($, the
entire hacienda +as assessed at P%#%,:&$.$$, and reassessed be-innin- Dece!ber
7%, %&($ in the -reatl" increased a!ount of P;,'&',%%$.$$. Said ob/ections +ere
e!bodied in a letter to the President, dated 4anuar" &, %&(%, but this not+ithstandin-,
the President, throu-h the E0ecutive Secretar", approved the Deed of )bsolute Sale on
ebruar" %, %&(%.
It appears that as earl" as the first +ee. of 4une, %&($, prior to the si-nin- of the deed
b" the parties, the PAAC ac=uired possession of the propert", +ith the consent of
petitioner, to enable the said PAAC to proceed i!!ediatel" +ith the construction of
roads in the ne+ settle!ent and to resettle the s=uatters and flood victi!s in Manila +ho
+ere rendered ho!eless b" the floods or e/ected fro! the lots +hich the" +ere then
occup"in- *)nne0es 9D9 and 9D5%9,.
On )pril %7, %&(%, the Provincial 1reasurer of 3ulacan re=uested the PAAC to +ithhold
the a!ount of P#$,$&&.8& fro! the purchase price to be paid b" it to the Philippine
Suburban Develop!ent Corporation. Said a!ount represented the realt" ta0 due on the
propert" involved for the calendar "ear %&(% *)nne0 9<9,.
Petitioner, throu-h the PAAC, paid under protest the above!entioned a!ount to the
Provincial 1reasurer of 3ulacan and thereafter, or on 4une %#, %&(%, b" letter, re=uested
then Secretar" of inance Do!inador )"tona to order a refund of the a!ount so paid.
Petitioner clai!ed that it ceased to be the o+ner of the land in =uestion upon the
e0ecution of the Deed of )bsolute Sale on Dece!ber 7&, %&($. Dpon reco!!endation
of the Provincial 1reasurer of 3ulacan, said re=uest +as denied b" the Secretar" of
inance in a letter5decision dated )u-ust 77, %&(%. Pertinent portions of this decision
are =uoted hereunder2 tH?.IJ%qwKI
.... the records sho+ that the deed of sale e0ecuted on Dece!ber 7&, %&($ ... +as
approved b" the President upon favorable reco!!endation of the Cabinet and the
37
Co!!ittee created for the purpose of surve"in- suitable lots +hich !a" be ac=uired for
relocatin- s=uatters in Manila on ebruar" %, %&(% onl" and that said instru!ent of sale
+as re-istered +ith the Re-ister of Deeds on March %;, %&(%.
1hat Corporation, as vendor, !aintains that in vie+ of the e0ecution of the deed of sale
on Dece!ber 7&, %&($ it ceased to be the o+ner of the propert" involved and that
conse=uentl" it +as under no obli-ation to pa" the real propert" ta0 thereon effective
4anuar" %, %&(%. In support of its stand, that Corporation cites )rticle %;&' of the Ne+
Civil Code of the Philippines +hich provides that 9+hen the sale is !ade throu-h a
public instru!ent, the e0ecution thereof shall be e=uivalent to the deliver" of the thin-
+hich is the ob/ect of the contract, if fro! the deed the contrar" does not appear or
cannot clearl" be inferred9 and )rticle %;&( of the sa!e Code +hich states that 9the
o+nership of the thin- sold is ac=uired b" the vendee fro! the !o!ent it is delivered to
hi! in an" of the +a"s specified in )rticles %;&8 to %:$%, or in an" other !anner
si-nif"in- an a-ree!ent that the possession is transferred fro! the vendor to the
vendee.9 On the other hand, the Provincial 1reasurer contends that, as under the Band
Re-istration )ct *)ct No. ;&(, the Philippine Suburban Develop!ent Corporation is still
the o+ner of the propert" until the deed of sale coverin- the sa!e has been actuall"
re-istered, the vendor is still liable to the pa"!ent of real propert" ta0 for the calendar
"ear %&(%.
It is no+ clai!ed in this appeal that the )uditor <eneral erred in disallo+in- the refund
of the real estate ta0 in the a!ount of P#$,;($.&$ because aside fro! the presu!ptive
deliver" of the propert" b" the e0ecution of the deed of sale on Dece!ber 7&, %&($, the
possession of the propert" +as actuall" delivered to the vendee prior to the sale, and,
therefore, b" the trans!ission of o+nership to the vendee, petitioner has ceased to be
the o+ner of the propert" involved, and, conse=uentl", under no obli-ation to pa" the
real propert" ta0 for the "ear %&(%.
Respondent, ho+ever, ar-ues that the presu!ptive deliver" of the propert" under )rticle
%;&' of the Civil Code does not appl" because of the re=uire!ent in the contract that
the sale shall first be approved b" the )uditor <eneral, pursuant to the E0ecutive Order
dated ebruar" #, %&:& and later b" the President, and that the petitioner should re-ister
the deed and secure a ne+ title in the na!e of the vendee before the -overn!ent can
be co!pelled to pa" the balance of P%,(8(,77#.$$ of the purchase price. Respondent
further contends that since the propert" involved is a land re-istered under the Band
Re-istration )ct *)ct No. ;&(,, until the deed of sale has been actuall" re-istered, the
vendor re!ains as the o+ner of the said propert", and, therefore, liable for the pa"!ent
of real propert" ta0.
@e find the petition !eritorious.
I .
It cannot be denied that the President of the Philippines, on 4une ', %&($, at his Cabinet
!eetin-, approved and authori6ed the purchase b" the national -overn!ent, throu-h
the PAAC, of the unoccupied portion of the propert" of petitionerE that on 4une %$, %&($,
the PAAC, actin- pursuant to the aforecited approval of the President, passed its
Resolution No. 8$$ approvin- and authori6in- the purchase of the unoccupied portion of
said propert"E and that after the PAAC too. possession of the afore!entioned propert"
on the first +ee. of 4une, %&($ to use it as a resettle!ent area for s=uatters and flood
victi!s fro! Manila and suburbs, the President of the Philippines at his Cabinet !eetin-
on 4une %#, %&($, approved and authori6ed the purchase b" the PAAC of the entire
propert" consistin- of 8:7.;&;$ hectares, instead of onl" the unoccupied portion thereof
as +as previousl" authori6ed.
Considerin- the afore!entioned approval and authori6ation b" the President of the
Philippines of the specific transaction in =uestion, and the fact that the contract here
involved L +hich is for a special purpose to !eet a special situation L +as entered into
precisel" to i!ple!ent the Presidential directive, the prior approval b" the )uditor
<eneral envisioned b" )d!inistrative Order No. 7&$, dated ebruar" #, %&:&, +ould
therefore, not be necessar".
)s @e held in -ederation of t%e Cnited NA!ARCO ,istributors v. National !ar(eting
Corporation,
1
the approval b" the )uditor <eneral conte!plated b" )d!inistrative Order
No. 7&$ dated ebruar" #, %&:&, refers to contracts in -eneral, ordinaril" entered into b"
-overn!ent offices and -overn!ent5o+ned or controlled corporations, and not to a
contract for a special purpose, to !eet a special situation and entered into in
i!ple!entation of a Presidential directive to solve and e!er-enc". In other +ords,
+here the contract alread" bears the approval of the President, the action of the )uditor
<eneral +ould no lon-er be necessar" because under the said )d!inistrative Order, the
President has, at an" rate, the final sa".
II
Dnder the civil la+, deliver" *tradition, as a !ode of trans!ission of o+nership !a"be
actual *real tradition, or constructive *constructive tradition,.
+
@hen the sale of real
propert" is !ade in a public instru!ent, the e0ecution thereof is e=uivalent to the
deliver" of the thin- ob/ect of the contract, if fro! the deed the contrar" does not appear
or cannot clearl" be inferred.
3
In other +ords, there is s"!bolic deliver" of the propert" sub/ect of the sale b" the
e0ecution of the public instru!ent, unless fro! the e0press ter!s of the instru!ent, or
b" clear inference therefro!, this +as not the intention of the parties. Such +ould be the
case, for instance, +hen a certain date is fi0ed for the purchaser to ta.e possession of
the propert" sub/ect of the conve"ance, or +here, in case of sale b" install!ents, it is
stipulated that until the last install!ent is !ade, the title to the propert" should re!ain
+ith the vendor, or +hen the vendor reserves the ri-ht to use and en/o" the properties
until the -atherin- of the pendin- crops,
,
or +here the vendor has no control over the
thin- sold at the !o!ent of the sale, and, therefore, its !aterial deliver" could not have
been !ade.
5
In the case at bar, there is no =uestion that the vendor had actuall" placed the vendee in
possession and control over the thin- sold, even before the date of the sale. 1he
38
condition that petitioner should first re-ister the deed of sale and secure a ne+ title in
the na!e of the vendee before the latter shall pa" the balance of the purchase price, did
not preclude the trans!ission of o+nership. In the absence of an e0press stipulation to
the contrar", the pa"!ent of the purchase price of the -ood is not a condition, precedent
to the transfer of title to the bu"er, but title passes b" the deliver" of the -oods.
6
III .
@e fail to see the !erit in respondentCs insistence that, althou-h possession +as
transferred to the vendee and the deed of sale +as e0ecuted in a public instru!ent on
Dece!ber 7&, l&($, the vendor still re!ains as o+ner of the propert" until the deed of
sale is actuall" re-istered +ith the Office of the Re-ister of Deeds, because the land sold
is re-istered under the 1orrens S"ste!. In a lon- line of cases alread" decided b" this
Court, the constant doctrine has been that, as bet+een the parties to a contract of sale,
re-istration is not necessar" to !a.e it valid and effective, for actual notice is e=uivalent
to re-istration.
-
Indeed, Section :$ of the Band Re-istration )ct provides that, even
+ithout the act of re-istration, a deed purportin- to conve" or affect re-istered land shall
operate as a contract bet+een the parties. 1he re-istration is intended to protect the
bu"er a-ainst clai!s of third persons arisin- fro! subse=uent alienations b" the vendor,
and is certainl" not necessar" to -ive effect to the deed of sale, as bet+een the parties
to the contract.
8
1he case of +argas v. Bancioco, 9 cited b" respondent, refers to a case involvin-
conflictin- ri-hts over re-istered propert" and those of innocent transferees +ho relied
on the clean titles of the properties in =uestion. It is, therefore, not relevant to the case at
bar.
In the case at bar, no ri-hts of third persons are involved, !uch less is there an"
subse=uent alienation of the sa!e propert". It is undisputed that the propert" is in the
possession of the vendee, even as earl" as the first +ee. of 4une, %&($, or si0 *(,
!onths prior to the e0ecution of the Deed of )bsolute Sale on Dece!ber 7&, %&($.
Since the deliver" of possession, coupled +ith the e0ecution of the Deed of )bsolute
Sale, had consu!!ated the sale and transferred the title to the purchaser,
10
@e,
therefore, hold that the pa"!ent of the real estate ta0 after such transfer is the
responsibilit" of the purchaser. Ao+ever, in the case at bar, the purchaser PAAC is a
-overn!ent entit" not sub/ect to real propert" ta0.
11
@AEREORE, the appealed decision is hereb" reversed, and the real propert" ta0 paid
under protest to the Provincial 1reasurer of 3ulacan b" petitioner Philippine Suburban
Develop!ent Corporation, in the a!ount of P#$,;($,&$, is hereb" ordered refunded.
@ithout an" pronounce!ent as to costs.
39
Republic of the Philippines
SUPREME COURT
Manila
IRS1 DIVISION
G.R. No. 80+98 #pr25 +6, 1990
E"C# PU(LS$NG F "STR(UTNG CORP., petitioner,
vs.
T$E SPOUSES LEONOR %&' GER#R"O S#NTOS, 'o2&B b.12&e11 .&'er t3e &%me
%&' 1t/5e o@ GS#NTOS (OO6STORE,G %&' T$E COURT OF #PPE#LS, respondents.
94iliano . a4son, R. =alderra4a"a4son, !ary Anne =. a4son for petitioner.
Cendana antos, ,el4undo F Cendana for private respondents.

CRU0, J.:
1he case before us calls for the interpretation of )rticle ::& of the Civil Code and raises
the particular =uestion of +hen a person !a" be dee!ed to have been 9unla+full"
deprived9 of !ovable propert" in the hands of another. 1he article runs in full as follo+s2
)rt. ::&. 1he possession of !ovable propert" ac=uired in -ood faith is e=uivalent to a
title. Nevertheless, one +ho has lost an" !ovable or has been unla+full" deprived
thereof, !a" recover it fro! the person in possession of the sa!e.
If the possessor of a !ovable lost or of +hich the o+ner has been unla+full" deprived
has ac=uired it in -ood faith at a public sale, the o+ner cannot obtain its return +ithout
rei!bursin- the price paid therefor.
1he !ovable propert" in this case consists of boo.s, +hich +ere bou-ht fro! the
petitioner b" an i!postor +ho sold it to the private respondents. O+nership of the boo.s
+as reco-ni6ed in the private respondents b" the Municipal 1rial Court,
1
+hich +as
sustained b" the Re-ional 1rial Court,
+
+hich +as in turn sustained b" the Court of
)ppeals.
3
1he petitioner as.s us to declare that all these courts have erred and should
be reversed.
1his case arose +hen on October :, %&'%, a person identif"in- hi!self as Professor
4ose Cru6 placed an order b" telephone +ith the petitioner co!pan" for ;$( boo.s,
pa"able on deliver".
,
EDC) prepared the correspondin- invoice and delivered the
boo.s as ordered, for +hich Cru6 issued a personal chec. coverin- the purchase price
of P',&&:.(:.
5
On October 8, %&'%, Cru6 sold %7$ of the boo.s to private respondent
Beonor Santos +ho, after verif"in- the sellerCs o+nership fro! the invoice he sho+ed
her, paid hi! P%,8$$.$$.
6
Mean+hile, EDC) havin- beco!e suspicious over a second order placed b" Cru6 even
before clearin- of his first chec., !ade in=uiries +ith the De la Salle Colle-e +here he
had clai!ed to be a dean and +as infor!ed that there +as no such person in its
e!plo". urther verification revealed that Cru6 had no !ore account or deposit +ith the
Philippine )!anah 3an., a-ainst +hich he had dra+n the pa"!ent chec..
-
EDC) then
+ent to the police, +hich set a trap and arrested Cru6 on October 8, %&'%. Investi-ation
disclosed his real na!e as 1o!as de la PeMa and his sale of %7$ of the boo.s he had
ordered fro! EDC) to the private
respondents.
8
On the ni-ht of the sa!e date, EDC) sou-ht the assistance of the police in Precinct : at
the DN )venue, +hich forced their +a" into the store of the private respondents and
threatened Beonor Santos +ith prosecution for bu"in- stolen propert". 1he" sei6ed the
%7$ boo.s +ithout +arrant, loadin- the! in a van belon-in- to EDC), and thereafter
turned the! over to the petitioner.
9
Protestin- this hi-h5handed action, the private respondents sued for recover" of the
boo.s after de!and for their return +as re/ected b" EDC). ) +rit of preli!inar"
attach!ent +as issued and the petitioner, after initial refusal, finall" surrendered the
boo.s to the private respondents.
10
)s previousl" stated, the petitioner +as
successivel" rebuffed in the three courts belo+ and no+ hopes to secure relief fro! us.
1o be-in +ith, the Court e0presses its disapproval of the arbitrar" action of the petitioner
in ta.in- the la+ into its o+n hands and forcibl" recoverin- the disputed boo.s fro! the
private respondents. 1he circu!stance that it did so +ith the assistance of the police,
+hich should have been the first to uphold le-al and peaceful processes, has
co!pounded the +ron- even !ore deplorabl". Fuestions li.e the one at bar are decided
not b" police!en but b" /ud-es and +ith the use not of brute force but of la+ful +rits.
No+ to the !erits
It is the contention of the petitioner that the private respondents have not established
their o+nership of the disputed boo.s because the" have not even produced a receipt to
prove the" had bou-ht the stoc.. 1his is unacceptable. Precisel", the first sentence of
)rticle ::& provides that 9the possession of !ovable propert" ac=uired in -ood faith is
e=uivalent to a title,9 thus dispensin- +ith further proof.
1he ar-u!ent that the private respondents did not ac=uire the boo.s in -ood faith has
been dis!issed b" the lo+er courts, and +e a-ree. Beonor Santos first ascertained the
o+nership of the boo.s fro! the EDC) invoice sho+in- that the" had been sold to Cru6,
+ho said he +as sellin- the! for a discount because he +as in financial need. Private
respondents are in the business of bu"in- and sellin- boo.s and often deal +ith hard5up
40
sellers +ho ur-entl" have to part +ith their boo.s at reduced prices. 1o Beonor Santos,
Cru6 !ust have been onl" one of the !an" such sellers she +as accusto!ed to dealin-
+ith. It is hardl" bad faith for an" one in the business of bu"in- and sellin- boo.s to bu"
the! at a discount and resell the! for a profit.
3ut the real issue here is +hether the petitioner has been unla+full" deprived of the
boo.s because the chec. issued b" the i!postor in pa"!ent therefor +as dishonored.
In its e0tended !e!orandu!, EDC) cites nu!erous cases holdin- that the o+ner +ho
has been unla+full" deprived of personal propert" is entitled to its recover" e0cept onl"
+here the propert" +as purchased at a public sale, in +hich event its return is sub/ect to
rei!burse!ent of the purchase price. 1he petitioner is be--in- the =uestion. It is puttin-
the cart before the horse. Dnli.e in the cases invo.ed, it has "et to be established in the
case at bar that EDC) has been unla+full" deprived of the boo.s.
1he petitioner ar-ues that it +as, because the i!postor ac=uired no title to the boo.s
that he could have validl" transferred to the private respondents. Its reason is that as the
pa"!ent chec. bounced for lac. of funds, there +as a failure of consideration that
nullified the contract of sale bet+een it and Cru6.
1he contract of sale is consensual and is perfected once a-ree!ent is reached bet+een
the parties on the sub/ect !atter and the consideration. )ccordin- to the Civil Code2
)rt. %;8:. 1he contract of sale is perfected at the !o!ent there is a !eetin- of !inds
upon the thin- +hich is the ob/ect of the contract and upon the price.
ro! that !o!ent, the parties !a" reciprocall" de!and perfor!ance, sub/ect to the
provisions of the la+ -overnin- the for! of contracts.
000 000 000
)rt. %;88. 1he o+nership of the thin- sold shall be transferred to the vendee upon the
actual or constructive deliver" thereof.
)rt. %;8'. 1he parties !a" stipulate that o+nership in the thin- shall not pass to the
purchaser until he has full" paid the price.
It is clear fro! the above provisions, particularl" the last one =uoted, that o+nership in
the thin- sold shall not pass to the bu"er until full pa"!ent of the purchase only if there
is a stipulation to that effect. Other+ise, the rule is that such o+nership shall pass fro!
the vendor to the vendee upon the actual or constructive deliver" of the thin-
sold even if the purchase price has not "et been paid.
Non5pa"!ent onl" creates a ri-ht to de!and pa"!ent or to rescind the contract, or to
cri!inal prosecution in the case of bouncin- chec.s. 3ut absent the stipulation above
noted, deliver" of the thin- sold +ill effectivel" transfer o+nership to the bu"er +ho can
in turn transfer it to another.
In )siatic Co!!ercial Corporation v. )n-,
11
the plaintiff sold so!e cos!etics to
rancisco )n-, +ho in turn sold the! to 1an Sit 3in. )siatic not havin- been paid b"
)n-, it sued for the recover" of the articles fro! 1an, +ho clai!ed he had validl" bou-ht
the! fro! )n-, pa"in- for the sa!e in cash. indin- that there +as no conspirac"
bet+een 1an and )n- to deceive )siatic the Court of )ppeals declared2
>et the defendant invo.ed )rticle ;(;
1+
of the Civil Code providin-, a!on- other thin-s
that 9one +ho has been unla+full" deprived of personal propert" !a" recover it fro! an"
person possessin- it.9 @e do not believe that the plaintiff has been unla+full" deprived
of the cartons of <loco 1onic +ithin the scope of this le-al provision. It has voluntaril"
parted +ith the! pursuant to a contract of purchase and sale. 1he circu!stance that the
price +as not subse=uentl" paid did not render ille-al a transaction +hich +as valid and
le-al at the be-innin-.
In 1a-atac v. 4i!ene6,
13
the plaintiff sold her car to eist, +ho sold it to Sanche6, +ho
sold it to 4i!ene6. @hen the pa"!ent chec. issued to 1a-atac b" eist +as dishonored,
the plaintiff sued to recover the vehicle fro! 4i!ene6 on the -round that she had been
unla+full" deprived of it b" reason of eistCs deception. In rulin- for 4i!ene6, the Court
of )ppeals held2
1he point of in=uir" is +hether plaintiff5appellant 1rinidad C. 1a-atac has been
unla+full" deprived of her car. )t first blush, it +ould see! that she +as unla+full"
deprived thereof, considerin- that she +as induced to part +ith it b" reason of the
chicaner" practiced on her b" @arner B. eist. Certainl", s+indlin-, li.e robber", is an
ille-al !ethod of deprivation of propert". In a !anner of spea.in-, plaintiff5appellant +as
9ille-all" deprived9 of her car, for the +a" b" +hich @arner B. eist induced her to part
+ith it is ille-al and is punished b" la+. 3ut does this 9unla+ful deprivation9 co!e +ithin
the scope of )rticle ::& of the Ne+ Civil CodeK
000 000 000
. . . 1he fraud and deceit practiced b" @arner B. eist ear!ar.s this sale as a voidable
contract *)rticle %#&$ N.C.C.,. 3ein- a voidable contract, it is susceptible of either
ratification or annul!ent. If the contract is ratified, the action to annul it is e0tin-uished
*)rticle %#&7, N.C.C., and the contract is cleansed fro! all its defects *)rticle %#&(,
N.C.C.,E if the contract is annulled, the contractin- parties are restored to their respective
situations before the contract and !utual restitution follo+s as a conse=uence *)rticle
%#&', N.C.C.,.
Ao+ever, as lon- as no action is ta.en b" the part" entitled, either that of annul!ent or
of ratification, the contract of sale re!ains valid and bindin-. @hen plaintiff5appellant
1rinidad C. 1a-atac delivered the car to eist b" virtue of said voidable contract of sale,
the title to the car passed to eist. Of course, the title that eist ac=uired +as defective
and voidable. Nevertheless, at the ti!e he sold the car to eli0 Sanche6, his title thereto
41
had not been avoided and he therefore conferred a -ood title on the latter, provided he
bou-ht the car in -ood faith, for value and +ithout notice of the defect in eistCs title
*)rticle %:$(, N.C.C.,. 1here bein- no proof on record that eli0 Sanche6 acted in bad
faith, it is safe to assu!e that he acted in -ood faith.
1he above rulin-s are sound doctrine and reflect our o+n interpretation of )rticle ::& as
applied to the case before us.
)ctual deliver" of the boo.s havin- been !ade, Cru6 ac=uired o+nership over the
boo.s +hich he could then validl" transfer to the private respondents. 1he fact that he
had not "et paid for the! to EDC) +as a !atter bet+een hi! and EDC) and did not
i!pair the title ac=uired b" the private respondents to the boo.s.
One !a" +ell i!a-ine the adverse conse=uences if the phrase 9unla+full" deprived9
+ere to be interpreted in the !anner su--ested b" the petitioner. ) person rel"in- on
the sellerCs title +ho bu"s a !ovable propert" fro! hi! +ould have to surrender it to
another person clai!in- to be the ori-inal o+ner +ho had not "et been paid the
purchase price therefor. 1he bu"er in the second sale +ould be left holdin- the ba-, so
to spea., and +ould be co!pelled to return the thin- bou-ht b" hi! in -ood faith +ithout
even the ri-ht to rei!burse!ent of the a!ount he had paid for it.
It bears repeatin- that in the case before us, Beonor Santos too. care to ascertain first
that the boo.s belon-ed to Cru6 before she a-reed to purchase the!. 1he EDC)
invoice Cru6 sho+ed her assured her that the boo.s had been paid for on deliver". 3"
contrast, EDC) +as less than cautious L in fact, too trustin- in dealin- +ith the
i!postor. )lthou-h it had never transacted +ith hi! before, it readil" delivered the boo.s
he had ordered *b" telephone, and as readil" accepted his personal chec. in pa"!ent. It
did not verif" his identit" althou-h it +as eas" enou-h to do this. It did not +ait to clear
the chec. of this un.no+n dra+er. @orse, it indicated in the sales invoice issued to hi!,
b" the printed ter!s thereon, that the boo.s had been paid for on deliver", thereb"
vestin- o+nership in the bu"er.
Surel", the private respondent did not have to -o be"ond that invoice to satisf" herself
that the boo.s bein- offered for sale b" Cru6 belon-ed to hi!E "et she did. )lthou-h the
title of Cru6 +as presu!ed under )rticle ::& b" his !ere possession of the boo.s, these
bein- !ovable propert", Beonor Santos nevertheless de!anded !ore proof before
decidin- to bu" the!.
It +ould certainl" be unfair no+ to !a.e the private respondents bear the pre/udice
sustained b" EDC) as a result of its o+n ne-li-ence. @e cannot see the /ustice in
transferrin- EDC)Cs loss to the Santoses +ho had acted in -ood faith, and +ith proper
care, +hen the" bou-ht the boo.s fro! Cru6.
@hile +e s"!pathi6e +ith the petitioner for its pli-ht, it is clear that its re!ed" is not
a-ainst the private respondents but a-ainst 1o!as de la PeMa, +ho has apparentl"
caused all this trouble. 1he private respondents have the!selves been undul"
inconvenienced, and for !erel" transactin- a custo!ar" deal not reall" unusual in their
.ind of business. It is the" and not EDC) +ho have a ri-ht to co!plain.
@AEREORE, the challen-ed decision is )IRMED and the petition is DENIED, +ith
costs a-ainst the petitioner.
42
7
G.R. No. 1595-8 Febr.%r/ 18, +009
ROGEL# "#CL#G %&' #"ELNO "#CL#G 7'e8e%1e'9, 1.b1t2t.te' b/ RO"EL M.
"#CL#G, %&' #"R#N M. "#CL#G, Petitioners,
vs.
ELNO M#C#$LG, #"EL# M#C#$LG, CONR#"O M#C#$LG, LOREN0#
$#(ER %&' (ENT# "EL ROS#RO, Respondents.
R E S O B D 1 I O N
#USTR#-M#RTNE0, J.:
3efore us is petitionersC Motion for Reconsideration of our Decision dated 4ul" 7', 7$$'
+here +e affir!ed the Decision dated October %8, 7$$% and the Resolution dated
)u-ust 8, 7$$# of the Court of )ppeals *C), in C)5<.R. CV No. ;';&'.
Records sho+ that +hile the land +as re-istered in the na!e of petitioner Ro-elia in
%&';, respondentsG co!plaint for reconve"ance +as filed in %&&%, +hich +as +ithin the
%$5"ear prescriptive period.
@e ruled that since petitioners bou-ht the propert" +hen it +as still an unre-istered
land, the defense of havin- purchased the propert" in -ood faith is unavailin-. @e
affir!ed the Re-ional 1rial Court *R1C, in findin- that petitioners should pa"
respondents their correspondin- share in the produce of the sub/ect land fro! the ti!e
the" +ere deprived thereof until the possession is restored to the!.
In their Motion for Reconsideration, petitioners contend that the %$5"ear period for
reconve"ance is applicable if the action is based on an i!plied or a constructive trustE
that since respondentsC action for reconve"ance +as based on fraud, the action !ust be
filed +ithin four "ears fro! the discover" of the fraud, citin- *erona v. ,e
*uA4an,
%
+hich +as reiterated in =albin v. !edalla.
7
@e do not a-ree.
In Caro v. Court of Appeals,
#
+e have e0plicitl" held that 9t3e pre18r2pt2He per2o' @or
t3e re8o&He/%&8e o@ @r%.'.5e&t5/ reB21tere' re%5 propert/ 21 10 /e%r1 re8Io&e'
@rom t3e '%te o@ t3e 211.%&8e o@ t3e 8ert2@28%te o@ t2t5e 0 0 0.9
;
Ao+ever, not+ithstandin- petitionersC un!eritorious ar-u!ent, the Court dee!s it
necessar" to !a.e certain clarifications. @e have earlier ruled that respondentsC action
for reconve"ance had not prescribed, since it +as filed +ithin the %$5"ear prescriptive
period.
#owever, a review of t%e factual antecedents of t%e case s%ows t%at respondents8
action for reconveyance was not even sub>ect to prescription.
1he deed of sale e0ecuted b" Ma0i!a in favor of petitioners +as null and void, since
Ma0i!a +as not the o+ner of the land she sold to petitioners, and the one5half northern
portion of such land +as o+ned b" respondents. 3ein- an absolute nullit", the deed is
sub/ect to attac. an"ti!e, in accordance +ith )rticle %;%$ of the Civil Code that an
action to declare the ine0istence of a void contract does not prescribe. Bi.e+ise, +e
have consistentl" ruled that +hen there is a sho+in- of such ille-alit", the propert"
re-istered is dee!ed to be si!pl" held in trust for the real o+ner b" the person in +hose
na!e it is re-istered, and the for!er then has the ri-ht to sue for the reconve"ance of
the propert".
:
)n action for reconve"ance based on a void contract is
i!prescriptible.
(
)s lon- as the land +ron-full" re-istered under the 1orrens s"ste! is
still in the na!e of the person +ho caused such re-istration, an action in persona! +ill
lie to co!pel hi! to reconve" the propert" to the real o+ner.
8
In this case, title to the
propert" is in the na!e of petitioner Ro-eliaE thus, the trial court correctl" ordered the
reconve"ance of the sub/ect land to respondents.
Petitioners ne0t contend that the" are possessors in -ood faith, thus, the a+ard of
da!a-es should not have been i!posed. 1he" further contend that under )rticle :;;, a
possessor in -ood faith is entitled to the fruits received before the possession is le-all"
interruptedE thus, if indeed petitioners are /ointl" and severall" liable to respondents for
the produce of the sub/ect land, the liabilit" should be rec.oned onl" for %&&% and not
%&';.
@e find partial !erit in this ar-u!ent.
)rticle :7' of the Civil Code provides that possession ac=uired in -ood faith does not
lose this character, e0cept in a case and fro! the !o!ent facts e0ist +hich sho+ that
the possessor is not una+are that he possesses the thin- i!properl" or +ron-full".
Possession in -ood faith ceases fro! the !o!ent defects in the title are !ade .no+n to
the possessors, b" e0traneous evidence or b" suit for recover" of the
propert" b" the true o+ner. @hatever !a" be the cause or the fact fro! +hich it can be
deduced that the possessor has .no+led-e of the defects of his title or !ode of
ac=uisition, it !ust be considered sufficient to sho+ bad faith.
'
Such interruption ta.es
place upon service of su!!ons.
&
lawp%il.net
)rticle :;; of the sa!e Code provides that a possessor in -ood faith is entitled to the
fruits onl" so lon- as his possession is not le-all" interrupted. Records sho+ that
petitioners received a su!!ons to-ether +ith respondentsC co!plaint on )u-ust :,
%&&%E
%$
thus, petitionersC -ood faith ceased on the da" the" received the su!!ons.
Conse=uentl", petitioners should pa" respondents %$ cavans of palay per annu!
be-innin- )u-ust :, %&&% instead of %&';.
43
inall", petitioner +ould li.e this Court to loo. into the findin- of the R1C that 9since
Ma0i!a died in October %&&#, +hatever char-es and clai!s petitioners !a" recover
fro! her e0pired +ith her9E and that the proper person to be held liable for da!a-es to
be a+arded to respondents should be Ma0i!a Divison or her estate, since she
!isrepresented herself to be the true o+ner of the sub/ect land.
@e are not persuaded.
Notabl", petitioners never raised this issue in their appellantsC brief or in their !otion for
reconsideration filed before the C). In fact, the" never raised this !atter before us +hen
the" filed their petition for revie+. 1hus, petitioners cannot raise the sa!e in this !otion
for reconsideration +ithout offendin- the basic rules of fair pla", /ustice and due process,
speciall" since Ma0i!a +as not substituted at all b" her heirs after the pro!ul-ation of
the R1C Decision.
:$EREFORE, petitionersG Motion for Reconsideration is P#RTL= GR#NTE". 1he
Decision of the Court of )ppeals dated 4ul" 7', 7$$' is MO"FE" onl" +ith respect to
prescription as discussed in the te0t of herein Resolution, and the dispositive portion of
the Decision is MO"FE" to the effect that petitioners are ordered to pa" respondents
%$ cavans of palay per annu! be-innin- )u-ust :, %&&% instead of %&';.
SO OR"ERE".
44
CE(U :NL#N" "E!ELOPMENT G.R. No. 1-3+15
CORPOR#TON,
Petitioner,

Present2

PDNO, C.J., Chairperson,
5 versus 5 C)RPIO,
CORON),
BEON)RDO5DE C)S1RO, and
3ERS)MIN, JJ.


ONG S#O $U#, Pro!ul-ated2
Respondent. M%/ +1, +009

0 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 0

" E C S O N

PUNO, C.J.>


3efore us is a Petition for Revie+
H%I
filed under Rule ;: of the Rules of Court
assailin- the Decision
H7I
dated ebruar" %;, 7$$( of the Court of )ppeals and its
Resolution
H#I
dated 4une 7, 7$$( den"in- petitionerGs !otion for reconsideration of the
said decision.

1he facts are undisputed.

Petitioner, Cebu @inland Develop!ent Corporation, is the o+ner and developer
of a condo!iniu! pro/ect called the Cebu @inland 1o+er Condo!iniu! located in
4uana Os!eMa E0tension, Cebu Cit".

Respondent, On- Siao Aua, is a bu"er of t+o condo!iniu! units and four par.in-
slots fro! petitioner.

So!eti!e before 4anuar" (, %&&: +hile the Cebu @inland 1o+er Condo!iniu!
+as under construction, petitioner offered to sell to respondent condo!iniu! units at
pro!otional prices. )s an added incentive, petitioner offered a #N discount provided
#$N of the purchase price is paid as do+n pa"!ent and the balance paid in 7; e=ual
!onthl" install!ents.

On 4anuar" (, %&&:, respondent accepted the offer of petitioner and bou-ht t+o
condo!iniu! units desi-nated as Dnit Nos. 7;$: and 7;$(, as +ell as four par.in- slots
desi-nated as slots &%, &&, %$% and %$# *sub/ect properties,.

1he area per condo!iniu! unit as indicated in petitionerGs price list is %:: s=uare
!eters and the price per s=uare !eter is P77,#8'.&:. 1he price for the par.in- slot
is P7;$,$$$ each. Respondent, therefore, paid P7,7&',(::.$' as do+n pa"!ent and
issued 7; postdated chec.s in the a!ount of P77#,;#$.8$ per chec. for the balance of
the purchase price in the total a!ount of P:,#(7,#':.%& co!puted as follo+s2
H;I

%:: s=.!.?unit 0 7 units 0 P77,#8'.&:?s=.!. P(,&#8,;8;.:$
; par.in- slots at P7;$,$$$?slot &($,$$$.$$
Sub5total P 8,'&8,;8;.:$
Bess2 #N discount * 7#(,&7;.7#,
Net purchase price P 8,(($,::$.78
#$N do+n pa"!ent * 7,7&',%(:.$',
3alance at P77#,;#$.8$ per !onth for 7; !onths P :,#(7,#':.%&

1he parties did not e0ecute an" +ritten docu!ent settin- forth the said transaction.

On October %$, %&&(, possession of the sub/ect properties +as turned over to
respondent.
H:I

)fter the purchase price +as full" paid +ith the last chec. dated 4anuar" #%, %&&8,
respondent re=uested petitioner for the condo!iniu! certificates of title evidencin-
o+nership of the units. Petitioner then sent to respondent, for the latterGs si-nature,
docu!ents deno!inated as Deeds of )bsolute Sale for the t+o condo!iniu! units.

Dpon e0a!ination of the deed of absolute sale of Dnit No. 7;$: and the identical
docu!ent for Dnit No. 7;$(, respondent +as distressed to find that the stated floor area
is onl" %78 s=uare !eters contrar" to the area indicated in the price list +hich +as %::
s=uare !eters. Respondent caused a verification surve" of the said condo!iniu! units
and discovered that the actual area is onl" %%$ s=uare !eters per unit. Respondent
de!anded fro! petitioner to refund the a!ount ofP7,$%;,%$:.:$ representin- e0cess
pa"!ents for the difference in the area, co!puted as follo+s2
H(I

%:: s=.!.5%%$ W ;: 0 7 units W &$ s=.!. 0 P77,#8'.&: W P7,$%;,%$:.:$

Petitioner refused to refund the said a!ount to respondent. Conse=uentl",
respondent filed a Co!plaint
H8I
on )u-ust 8, %&&' in the Re-ional Office of the Aousin-
and Band Dse Re-ulator" 3oard *ABDR3, in Cebu Cit", pra"in- for the refund
of P7,$%;,%$:.:$ plus interest, !oral da!a-es and attorne"Gs fees, includin- the
suspension of petitionerGs license to sell. 1he case +as doc.eted as ABDR3 Case No.
REM5$77$5$'$8&'.

On Dece!ber (, %&&&, the Aousin- and Band Dse )rbiter *the )rbiter, rendered a
Decision
H'I
dis!issin- the co!plaint. 1he )rbiter found petitioner not -uilt" of
!isrepresentation. Considerin- further that the sub/ect properties have been delivered
on October %$, %&&( and respondent filed his co!plaint onl" on )u-ust 8, %&&', the
45
)rbiter further ruled that respondentGs action had alread" prescribed pursuant to )rticle
%:;#,
H&I
in relation to )rticles %:#& and %:;7,
H%$I
of the Civil Code. 1he dispositive portion
of the said decision reads2

:$EREFORE, Prem21e1 Co&12'ere', /ud-!ent is hereb"
rendered "SMSSNG this Co!plaint, and orderin- the parties to do the
follo+in-, to +it2

%. or the Co!plainant to SI<N the t+o *7, DeedHsI of )bsolute Sale +hich
this 3oard finds to be in order +ithin #$ da"s fro! finalit" of this decisionE and

7. or the Respondent to DEBIVER the correspondin- condo!iniu!
certificate of title for the t+o units na!el" units 7;$: and 7;$( free fro! all
liens and encu!brances.

Conse=uentl", the counterclai! is li.e+ise dis!issed for it finds no evidence
that Co!plainant acted in bad faith in filin- this co!plaint.

Cost a-ainst the parties.

SO OR"ERE".
H%%I

)--rieved, respondent filed a Petition for Revie+ of said decision +ith the 3oard
of Co!!issioners of the ABDR3 *the 3oard,. In the course of its proceedin-s, the
3oard ordered that an ocular inspection of Dnit Nos. 7;$: and 7;$( be conducted b" an
independent en-ineer. 1he 3oard further ordered that there should be t+o
!easure!ents of the areas in controvers", one based on the !aster deed and another
based on the internal surface of the peri!eter +all. )fter the ocular inspection, the
independent -eodetic en-ineer found the follo+in- !easure!ents2

Dnit 7;$:5 3ased on internal face of peri!eter +all W %$& s=.
!. 3ased on !aster deed W %%: s=. !.

Dnit 7;$(5 3ased on internal face of peri!eter +all W %%$ s=. !.
3ased on !aster deed W %%( s=. !.
H%7I

1hereafter, the 3oard rendered its Decision
H%#I
dated 4une ', 7$$; affir!in- the
)rbiterGs findin- that respondentGs action had alread" prescribed. Ao+ever, the 3oard
found that there +as a !ista.e re-ardin- the ob/ect of the sale constitutin- a -round for
rescission based on )rticles %##$ and %##%
H%;I
of the Civil Code. Aence, the 3oard
!odified the decision of the )rbiter as follo+s2

@hereforeH,I the decision of the HOIffice belo+ is hereb" !odified +ith
the follo+in- additional directive2

In the alternative, and at the option of the co!plainant, the contract is
rescinded and the respondent is directed to refund to *sic, P8,(($,::$H.I78
+hile co!plainant is directed to turn over possession of the units 7;$:, 7;$(
and the four par.in- lots to the respondent.

So ordered.
H%:I

Not satisfied +ith the decision of the 3oard, petitioner filed an appeal to the Office of the
President ar-uin- that the 3oard erred in -rantin- relief to respondent considerin- that
the latterGs action had alread" prescribed. On March %%, 7$$:, the Office of the
President rendered a Decision
H%(I
findin- that respondentGs action had alread" prescribed
pursuant to )rticle %:;# of the Civil Code. 1he dispositive portion of said decision reads
as follo+s2

:$EREFORE, pre!ises considered, the Decision dated 4une ', 7$$;
of the ABDR3 is hereb" MO"FE" and the Decision dated Dece!ber (, %&&&
of the Aousin- and Band Dse )rbiter is hereb" RENST#TE".

SO OR"ERE".
H%8I

Respondent filed a Motion for Reconsideration but the sa!e +as denied b" the Office of
the President in a Resolution
H%'I
dated 4une 7$, 7$$:. Aence, respondent filed a Petition
for Revie+ before the Court of )ppeals.

On ebruar" %;, 7$$(, the Court of )ppeals rendered the assailed Decision findin- that
respondentGs action has not prescribed. 1he dispositive portion of the Decision reads2

:$EREFORE, in vie+ of the fore-oin- pre!ises, /ud-!ent is hereb"
rendered b" us GR#NTNG the petition filed in this case, RE!ERSNG %&'
SETTNG #S"E the assailed Decision and Resolution of the Office of the
President dated March %%, 7$$: and 4une 7$, 7$$:, respectivel", and
reinstatin- the Decision pro!ul-ated b" the 3oard of Co!!issioners of the
ABDR3 on 4une ', 7$$;.

SO OR"ERE".
H%&I


PetitionerGs Motion for Reconsideration
H7$I
of the assailed decision havin- been denied in
the Resolution dated 4une 7, 7$$(, petitioner is no+ before us, in this petition for revie+
raisin- the follo+in- -rounds2

I.

1he Court of )ppeals Erred in Aoldin- 1hat in ) Contract of Sale O+nership Is
Not 1ransferred b" Deliver"H.I

II.

1he Court of )ppeals Erred in Aoldin- 1hat RespondentGs )ction Aas Not
Prescribed.

III.
46

1he Court of )ppeals Erred )nd E0ceeded Its 4urisdiction @hen It ound
Petitioner <uilt" Of Misrepresentation )s 1he Decision Of 1he ABDR3 3oard
of Co!!issioners On 1he Sa!e Matter Is inal @ith Respect 1o Respondent
@ho Did Not )ppeal Said Decision 1hat Petitioner Did Not Co!!it
Misrepresentation.
H7%I


1he issue before us is +hether respondentGs action has prescribed pursuant to
)rticle %:;#, in relation to )rticles %:#& and %:;7 of the Civil Code, to wit2

)R1ICBE %:#&. 1he obli-ation to deliver the thin- sold includes that of
placin- in the control of the vendee all that is !entioned in the contract, in
confor!it" +ith the follo+in- rules2

If the sale of real estate should be !ade D2t3 % 1t%teme&t o@ 2t1 %re%, %t t3e
r%te o@ % 8ert%2& pr28e @or % .&2t o@ me%1.re or &.mber, the vendor shall be
obli-ed to deliver to the vendee, if the latter should de!and it, all that !a" have
been stated in the contractE but, should this be not possible, the vendee !a"
choose bet+een a proportional reduction of the price and the rescission of the
contract, provided that, in the latter case, the lac. in the area be not less than
one5tenth of that stated.

1he sa!e shall be done, even +hen the area is the sa!e, if an" part of the
i!!ovable is not of the =ualit" specified in the contract.
1he rescission, in this case, shall onl" ta.e place at the +ill of the vendee,
+hen the inferior value of the thin- sold e0ceeds one5tenth of the price a-reed
upon.

Nevertheless, if the vendee +ould not have bou-ht the i!!ovable had he
.no+n of its s!aller area or inferior =ualit", he !a" rescind the sale. *%;(&a,
HE!phasis suppliedI

)R1ICBE %:;7. In the sale of real estate, !ade for a 5.mp 1.m and not
at the rate of a certain su! for a unit of !easure or nu!ber, there shall be no
increase or decrease of the price, althou-h there be a -reater or lesser area or
nu!ber than that stated in the contract.

1he sa!e rule shall be applied +hen t+o or !ore i!!ovables are sold for a
sin-le priceE but if, besides !entionin- the boundaries, +hich is indispensable
in ever" conve"ance of real estate, its area or nu!ber should be desi-nated in
the contract, the vendor shall be bound to deliver all that is included +ithin said
boundaries, even +hen it e0ceeds the area or nu!ber specified in the contractE
and, should he not be able to do so, he shall suffer a reduction in the price, in
proportion to +hat is lac.in- in the area or nu!ber, unless the contract is
rescinded because the vendee does not accede to the failure to deliver +hat
has been stipulated. *%;8%, HE!phasis suppliedI

)R1ICBE %:;#. 1he actions arisin- fro! )rticles %:#& and %:;7
shall pre18r2be 2& 12J mo&t31, 8o.&te' @rom t3e '%/ o@ 'e52Her/. *%;87a,
HE!phasis suppliedI

Petitioner ar-ues that it delivered possession of the sub/ect properties to
respondent on October %$, %&&(, hence, respondentGs action filed on )u-ust 8, %&&'
has alread" prescribed.

Respondent, on the one hand, contends that his action has not prescribed
because the prescriptive period has not be-un to run as the sa!e !ust be rec.oned
fro! the e0ecution of the deeds of sale +hich has not "et been done.

1he resolution of the issue at bar necessitates a scrutin" of the concept of
Qdeliver"R in the conte0t of the Ba+ on Sales or as used in )rticle %:;# of the Civil
Code. Dnder the Civil Code, the vendor is bound to transfer the o+nership of and
deliver the thin- +hich is the ob/ect of the sale. 1he pertinent provisions of the Civil
Code on the obli-ation of the vendor to deliver the ob/ect of the sale provide2

)R1ICBE %;&:. 1he vendor is bound to transfer the o+nership of and
deliver, as +ell as +arrant the thin- +hich is the ob/ect of the sale. *%;(%a,

)R1ICBE %;&(. 1he o+nership of the thin- sold is ac=uired b" the vendee
fro! the !o!ent it is delivered to hi! in an" of the +a"s specified in )rticles
%;&8 to %:$%, or in an" other !anner si-nif"in- an a-ree!ent that the
possession is transferred fro! the vendor to the vendee. *n,

)R1ICBE %;&8. 1he thin- sold shall be understood as delivered, +hen it is
placed in the control and possession of the vendee. *%;(7a,

)R1ICBE %;&'. @hen the sale is !ade throu-h a public instru!ent, the
e0ecution thereof shall be e=uivalent to the deliver" of the thin- +hich is the
ob/ect of the contract, if fro! the deed the contrar" does not appear or cannot
clearl" be inferred.

0000

Dnder the Civil Code, o+nership does not pass b" !ere stipulation but onl" b" deliver".
H77I
Manresa e0plains, Qt3e 'e52Her/ o@ t3e t32&B . . . 12B&2@2e1 t3%t t2t5e 3%1 p%11e'
@rom t3e 1e55er to t3e b./er.9
H7#I
)ccordin- to 1olentino, the purpose of deliver" is not
onl" for the en/o"!ent of the thin- but also a !ode of ac=uirin- do!inion and
deter!ines the trans!ission of o+nership, the birth of the real ri-ht. 1he deliver" under
an" of the for!s provided b" )rticles %;&8 to %:$: of the Civil Code 12B&2@2e1 t3%t t3e
tr%&1m2112o& o@ oD&er132p @rom He&'or to He&'ee 3%1 t%Ie& p5%8e.
H7;I


)rticle %;&8 above conte!plates +hat is .no+n as real or actual deliver", +hen
the thin- sold is placed in the control and possession of the vendee. )rticle %;&', on
the one hand, refers to s"!bolic deliver" b" the e0ecution of a public instru!ent. It
should be noted, ho+ever, that )rticle %;&' does not sa" that the e0ecution of the deed
47
provides a conclusive presu!ption of the deliver" of possession. It confines itself to
providin- that the e0ecution thereof is e=uivalent to deliver", +hich !eans that the
presu!ption therein can be rebutted b" !eans of clear and convincin- evidence. 1hus,
the presu!ptive deliver" b" the e0ecution of a public instru!ent can be ne-ated b" the
failure of the vendee to ta.e actual possession of the land sold.
H7:I


In EK.%tor2%5 Re%5t/ "eHe5opme&t, &8. H. M%/@%2r T3e%ter, &8.,
H7(I
the concept
of Qdeliver"R +as e0plained as follo+s2

Deliver" has been described as a co!posite act, a thin- in +hich both
parties !ust /oin and the !inds of both parties concur. t 21 %& %8t b/ D3283
o&e p%rt/ p%rt1 D2t3 t3e t2t5e to %&' t3e po11e112o& o@ t3e propert/, %&'
t3e ot3er %8K.2re1 t3e r2B3t to %&' t3e po11e112o& o@ t3e 1%me. In its
natural sense, deliver" !eans so!ethin- in addition to the deliver" of propert"
or titleE it !eans transfer of possession. & t3e L%D o& S%5e1, 'e52Her/ m%/ be
e2t3er %8t.%5 or 8o&1tr.8t2He, b.t bot3 @orm1 o@ 'e52Her/ 8o&temp5%te
Gt3e %b1o5.te B2H2&B .p o@ t3e 8o&tro5 %&' 8.1to'/ o@ t3e propert/ o& t3e
p%rt o@ t3e He&'or, %&' t3e %11.mpt2o& o@ t3e 1%me b/ t3e
He&'ee.G *E!phasis supplied,

& 52B3t o@ t3e @oreBo2&B, C'e52Her/L %1 .1e' 2& t3e L%D o& S%5e1 re@er1 to t3e
8o&8.rre&t tr%&1@er o@ tDo t32&B1> 719 po11e112o& %&' 7+9 oD&er132p. 1his is the
rationale behind the /urisprudential doctrine that presu!ptive deliver" via e0ecution of a
public instru!ent is ne-ated b" the realit" that the vendee actuall" failed to obtain
!aterial possession of the land sub/ect of the sale.
H78I
& t3e 1%me He2&, 2@ t3e He&'ee
21 p5%8e' 2& %8t.%5 po11e112o& o@ t3e propert/, b.t b/ %Breeme&t o@ t3e p%rt2e1
oD&er132p o@ t3e 1%me 21 ret%2&e' b/ t3e He&'or .&t25 t3e He&'ee 3%1 @.55/ p%2'
t3e pr28e, t3e mere tr%&1@er o@ t3e po11e112o& o@ t3e propert/ 1.bMe8t o@ t3e 1%5e 21
&ot t3e C'e52Her/L 8o&temp5%te' 2& t3e L%D o& S%5e1 or %1 .1e' 2& #rt285e 15,3 o@
t3e C2H25 Co'e.

In the case at bar, it appears that respondent +as alread" placed in possession of the
sub/ect properties. Ao+ever, it is cr"stal clear that the deeds of absolute sale +ere still
to be e0ecuted b" the parties upon pa"!ent of the last install!ent. 1his fact sho+s that
o+nership of the said properties +as +ithheld b" petitioner. ollo+in- case la+, it is
evident that the parties did not intend to i!!ediatel" transfer o+nership of the sub/ect
properties until full pa"!ent and the e0ecution of the deeds of absolute sale.
H7'I
Conse=uentl", there is no Qdeliver"R to spea. of in this case since +hat +as
transferred +as possession onl" and not o+nership of the sub/ect properties.

@e, therefore, hold that the transfer of possession of the sub/ect properties on October
%$, %&&( to respondent cannot be considered as Qdeliver"R +ithin the purvie+ of )rticle
%:;# of the Civil Code. It follo+s that since there has been no transfer of o+nership of
the sub/ect properties since the deeds of absolute sale have not "et been e0ecuted b"
the parties, the action filed b" respondent has not prescribed.

1he ne0t issue is +hether the sale in the case at bar is one !ade +ith a state!ent of its
area or at the rate of a certain price for a unit of !easure and not for a lu!p
su!. )rticle %:#& provides that QIf the sale of real estate should be !ade +ith a
state!ent of its area, at the rate of a certain price for a unit of !easure or nu!ber, the
vendor shall be obli-ed to deliver to the vendeeTall that !a" have been stated in the
contractE but, should this be not possible, the vendee !a" choose bet+een a
proportional reduction of the price and the rescission of the contractT.R )rticle %:;7, on
the one hand, provides that QIn the sale of real estate, !ade for a lu!p su! and not at
the rate of a certain su! for a unit of !easure or nu!ber, there shall be no increase or
decrease of the price, althou-h there be a -reater or lesser area or nu!ber than that
stated in the contract.9

1he distinction bet+een )rticle %:#& and )rticle %:;7 +as e0plained b" Manresa
H7&I
as
follo+s2

. . . If the sale +as !ade for a price per unit of !easure or nu!ber, the
consideration of the contract +ith respect to the vendee, is the nu!ber of such
units, or, if "ou +ish, the thin- purchased as deter!ined b" the stipulated
nu!ber of units. 3ut if, on the other hand, the sale +as !ade for a lu!p su!,
the consideration of the contract is the ob/ect sold, independentl" of its nu!ber
or !easure, the thin- as deter!ined b" the stipulated boundaries, +hich has
been called in la+ a deter4inate ob>ect.

1his difference in consideration bet+een the t+o cases i!plies a distinct
re-ulation of the obli-ation to deliver the ob/ect, because, for an ac=uittance
deliver" !ust be !ade in accordance +ith the a-ree!ent of the parties, and
the perfor!ance of the a-ree!ent !ust sho+ the confir!ation, in fact, of the
consideration +hich induces each of the parties to enter into the contract.

In R.'o5@ L2etN, &8. H. Co.rt o@ #ppe%51,
H#$I
+e held2

)rticle %:#& -overns a sale of i!!ovable b" the unit, that is, at a stated rate
per unit area. In a unit price contract, the state!ent of area of i!!ovable is not
conclusive and the price !a" be reduced or increased dependin- on the area
actuall" delivered. If the vendor delivers less than the area a-reed upon, the
vendee !a" obli-e the vendor to deliver all that !a" be stated in the contract
or de!and for the proportionate reduction of the purchase price if deliver" is
not possible. If the vendor delivers !ore than the area stated in the contract,
the vendee has the option to accept onl" the a!ount a-reed upon or to accept
the +hole area, provided he pa"s for the additional area at the contract rate.

In so!e instances, a sale of an i!!ovable !a" be !ade for a lu!p su! and
not at a rate per unit. 1he parties a-ree on a stated purchase price for an
i!!ovable the area of +hich !a" be declared based on an esti!ate or +here
both the area and boundaries are stated.

In the case +here the area of the i!!ovable is stated in the contract based on
an esti!ate, the actual area delivered !a" not !easure up e0actl" +ith the
area stated in the contract. )ccordin- to )rticle %:;7 of the Civil Code, in the
sale of real estate, !ade for a lu!p su! and not at the rate of a certain su! for
a unit of !easure or nu!ber, there shall be no increase or decrease of the
48
price althou-h there be a -reater or lesser area or nu!ber than that stated in
the contract. Ao+ever, the discrepanc" !ust not be substantial. ) vendee of
land, +hen sold in -ross or +ith the description 9!ore or less9 +ith reference to
its area, does not thereb" ipso facto ta.e all ris. of =uantit" in the land. 1he use
of 9!ore or less9 or si!ilar +ords in desi-natin- =uantit" covers onl" a
reasonable e0cess or deficienc".

@here both the area and the boundaries of the i!!ovable are declared, the
area covered +ithin the boundaries of the i!!ovable prevails over the stated
area. In cases of conflict bet+een areas and boundaries, it is the latter +hich
should prevail. @hat reall" defines a piece of -round is not the area, calculated
+ith !ore or less certaint", !entioned in its description, but the boundaries
therein laid do+n, as enclosin- the land and indicatin- its li!its. In a contract of
sale of land in a !ass, it is +ell established that the specific boundaries stated
in the contract !ust control over an" state!ent +ith respect to the area
contained +ithin its boundaries. It is not of vital conse=uence that a deed or
contract of sale of land should disclose the area +ith !athe!atical accurac". It
is sufficient if its e0tent is ob/ectivel" indicated +ith sufficient precision to enable
one to identif" it. )n error as to the superficial area is i!!aterial. 1hus, the
obli-ation of the vendor is to deliver ever"thin- +ithin the boundaries,
inas!uch as it is the entiret" thereof that distin-uishes the deter!inate ob/ect.

In the case at bar, it is undisputed b" the parties that the purchase price of the sub/ect
properties +as co!puted based on the price list prepared b" petitioner, orP77,#8'.&:
per s=uare !eter. Clearl", the parties a-reed on a sale at a rate of a certain price per
unit of !easure and not one for a lu!p su!. Aence, it is )rticle %:#& and not )rticle
%:;7 +hich is the applicable la+. )ccordin-l", respondent is entitled to the relief
afforded to hi! under )rticle %:#&, that is, either a proportional reduction of the price or
the rescission of the contract, at his option. Respondent chose the for!er re!ed" since
he pra"ed in his Co!plaint for the refund of the a!ount of P7,$%;,%$:.:$ representin-
the proportional reduction of the price paid to petitioner.

In its decision, the Court of )ppeals held that the action filed b" respondent has
not prescribed and reinstated the decision of the 3oard. It is an error to reinstate the
decision of the 3oard. 1he 3oard, in its decision, held that there +as a !ista.e
re-ardin- the ob/ect of the sale constitutin- a -round for rescission based on )rticles
%##$ and %##% of the Civil Code. It then -ranted the relief of rescission at the option of
respondent. )rticles %##$ and %##% of the Civil Code provide2

)R1ICBE %##$. ) contract +here consent is -iven throu-h !ista.e, violence,
inti!idation, undue influence, or fraud is voidable. *%7(:a,

)R1ICBE %##%. In order that !ista.e !a" invalidate consent, it should refer to
the substance of the thin- +hich is the ob/ect of the contract, or to those
conditions +hich have principall" !oved one or both parties to enter into the
contract.

@e find that these articles are inapplicable to the case at bar. In order that
!ista.e !a" invalidate consent and constitute a -round for annul!ent of contract based
on )rticle %##%, the !ista.e !ust be !aterial as to -o to the essence of the contractE
that +ithout such !ista.e, the a-ree!ent +ould not have been !ade.
H#%I
1he effect of
error !ust be deter!ined lar-el" b" its influence upon the part". If the part" +ould have
entered into the contract even if he had .no+led-e of the true fact, then the error does
not vitiate consent.
H#7I

In the case at bar, the relief sou-ht b" respondent +as for a refund and he
continued to occup" the sub/ect properties after he found out that the sa!e +ere s!aller
in area. )ll these sho+ that respondent did not consider the error in si6e si-nificant
enou-h to vitiate the contract. Aence, the Court of )ppeals erred in affir!in- the 3oardGs
decision to -rant rescission based on )rticles %##$ and %##% of the Civil Code.

N !E: :$EREOF, the petition is DENIED. 1he decision of the Court of )ppeals is
)IRMED but +ith the MODIIC)1ION that the decision of the ABDR3 is not
reinstated. Petitioner is ordered to refund the a!ount of 1+o Million ourteen 1housand
One Aundred ive Pesos and ift" Centavos *P7,$%;,%$:.:$,to respondent +ith le-al
interest of si0 percent *(N, per annu! fro! )u-ust 8, %&&', the date of /udicial
de!and. ) t+elve percent *%7N, interest per annu!, in lieu of si0 percent *(N,, shall
be i!posed on such a!ount fro! the date of pro!ul-ation of this decision until the
pa"!ent thereof. Costs a-ainst petitioner.

SO OR"ERE".
49
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 16-195 M%/ 8, +009
#SSET PR!#T0#TON TRUST, Petitioner,
vs.
T.*. ENTERPRSES, Respondent.
D E C I S I O N
TNG#, J.:
1his is a Rule ;: petition
%
+hich see.s the reversal of the Court of )ppealsG
decision
7
and resolution
#
affir!in- the R1CGs decision
;
holdin- petitioner liable for actual
da!a-es for breach of contract.
Petitioner )sset Privati6ation 1rust
:
*petitioner, +as a -overn!ent entit" created for the
purpose to conserve, to provisionall" !ana-e and to dispose assets of -overn!ent
institutions.
(
Petitioner had ac=uired fro! the Develop!ent 3an. of the Philippines
*D3P, assets consistin- of !achiner" and refri-eration e=uip!ent +hich +ere then
stored at <olden Cit" co!pound, Pasa" Cit". 1he co!pound +as then leased to and in
the ph"sical possession of Creative Bines, Inc., *Creative Bines,. 1hese assets +ere
bein- sold on an as5is5+here5is basis.
On 8 Nove!ber %&&$, petitioner and respondent entered into an absolute deed of sale
over certain !achiner" and refri-eration e=uip!ent identified as Bots Nos. 7, # and :.
Respondent paid the full a!ount of P';,$$$.$$ as evidenced b" petitionerGs Receipt No.
%7';;. )fter t+o *7, da"s, respondent de!anded the deliver" of the !achiner" it had
purchased. So!eti!e in March %&&%, petitioner issued <ate Pass No. ;&::.
Respondent +as able to pull out fro! the co!pound the properties desi-nated as Bots
Nos. # and :. Ao+ever, durin- the haulin- of Bot No. 7 consistin- of si0teen *%(, ite!s,
onl" nine *&, ite!s +ere pulled out b" respondent. 1he seven *8, ite!s that +ere left
behind consisted of the follo+in-2 *%, one *%, Reefer Dnit %E *7, one *%, Reefer Dnit 7E *#,
one *%, Reefer Dnit #E *;, one *%, unit blast free6er +ith all accessoriesE *:, one *%, unit
chest free6erE *(, one *%, unit roo! air5conditionerE and *8, one *%, unit air co!pressor.
Creative BinesG e!plo"ees prevented respondent fro! haulin- the re!ainin- !achiner"
and e=uip!ent.
Respondent filed a co!plaint for specific perfor!ance and da!a-es a-ainst petitioner
and Creative Bines.
8
Durin- the pendenc" of the case, respondent +as able to pull out
the re!ainin- !achiner" and e=uip!ent. Ao+ever, upon inspection it +as discovered
that the !achiner" and e=uip!ent +ere da!a-ed and had !issin- parts.
Petitioner ar-ued that upon the e0ecution of the deed of sale it had co!plied +ith its
obli-ation to deliver the ob/ect of the sale since there +as no stipulation to the contrar".
It further ar-ued that bein- a sale on an as5is5+here5is basis, it +as the dut" of
respondent to ta.e possession of the propert". Petitioner clai!ed that there +as alread"
a constructive deliver" of the !achiner" and e=uip!ent.
1he R1C ruled that the e0ecution of the deed of absolute sale did not result in
constructive deliver" of the !achiner" and e=uip!ent. It found that at the ti!e of the
sale, petitioner did not have control over the !achiner" and e=uip!ent and, thus, could
not have transferred o+nership b" constructive deliver". 1he R1C ruled that petitioner is
liable for breach of contract and should pa" for the actual da!a-es suffered b"
respondent.
On petitionerGs appeal, the Court of )ppeals affir!ed in toto the decision of the R1C.
Aence this petition.
3efore this Court, petitioner raises issues b" attributin- the follo+in- errors to the Court
of )ppeals, to +it2
I.
1he Court of )ppeals erred in not findin- that petitioner had co!plied +ith its obli-ation
to !a.e deliver" of the properties sub/ect of the contract of sale.
II.
1he Court of )ppeals erred in not considerin- that the sale +as on an 9as5is5+here5is9
basis +herein the properties +ere sold in the condition and in the place +here the" +ere
located.
III.
1he Court of )ppeals erred in not considerin- that respondentGs acceptance of
petitionerGs disclai!er of +arrant" forecloses respondentGs le-al basis to enforce an"
ri-ht arisin- fro! the contract.
IV.
1he reason for the failure to !a.e actual deliver" of the properties +as not attributable
to the fault and +as be"ond the control of petitioner. 1he clai! for da!a-es a-ainst
petitioner is therefore bereft of le-al basis.
'
50
1he first issue hin-es on the deter!ination of +hether there +as a constructive deliver"
of the !achiner" and e=uip!ent upon the e0ecution of the deed of absolute sale
bet+een petitioner and respondent.
1he o+nership of a thin- sold shall be transferred to the vendee upon the actual or
constructive deliver" thereof.
&
1he thin- sold shall be understood as delivered +hen it is
placed in the control and possession of the vendee.
%$
)s a -eneral rule, +hen the sale is !ade throu-h a public instru!ent, the e0ecution
thereof shall be e=uivalent to the deliver" of the thin- +hich is the ob/ect of the contract,
if fro! the deed the contrar" does not appear or cannot clearl" be inferred. )nd +ith
re-ard to !ovable propert", its deliver" !a" also be !ade b" the deliver" of the .e"s of
the place or depositor" +here it is stored or .ept.
%%
In order for the e0ecution of a public
instru!ent to effect tradition, the purchaser !ust be placed in control of the thin- sold.
%7
Ao+ever, the e0ecution of a public instru!ent onl" -ives rise to a pri!a facie
presu!ption of deliver". Such presu!ption is destro"ed +hen the deliver" is not
effected because of a le-al i!pedi!ent.
%#
It is necessar" that the vendor shall have
control over the thin- sold that, at the !o!ent of sale, its !aterial deliver" could have
been !ade.
%;
1hus, a person +ho does not have actual possession of the thin- sold
cannot transfer constructive possession b" the e0ecution and deliver" of a public
instru!ent.
%:
In this case, there +as no constructive deliver" of the !achiner" and e=uip!ent upon
the e0ecution of the deed of absolute sale or upon the issuance of the -ate pass since it
+as not petitioner but Creative Bines +hich had actual possession of the propert". 1he
presu!ption of constructive deliver" is not applicable as it has to "ield to the realit" that
the purchaser +as not placed in possession and control of the propert".
On the second issue, petitioner posits that the sale bein- in an as5is5+here5is basis,
respondent a-reed to ta.e possession of the thin-s sold in the condition +here the" are
found and fro! the place
+here the" are located. 1he phrase as5is +here5is basis pertains solel" to the ph"sical
condition of the thin- sold, not to its le-al situation.
%(
It is !erel" descriptive of the state
of the thin- sold. 1hus, the as5is +here5is basis !erel" describes the actual state and
location of the !achiner" and e=uip!ent sold b" petitioner to respondent. 1he depiction
does not alter petitionerGs responsibilit" to deliver the propert" to
respondent.)awp%i).AwL
)nent the third issue, petitioner !aintains that the presence of the disclai!er of +arrant"
in the deed of absolute sale absolves it fro! all +arranties, i!plied or other+ise. 1he
position is untenable.
1he vendor is bound to transfer the o+nership of and deliver, as +ell as +arrant the
thin- +hich is the ob/ect of the sale.
%8
O+nership of the thin- sold is ac=uired b" the
vendee fro! the !o!ent it its delivered to hi! in an" of the +a"s specified in articles
%;&8 to %:$%, or in an" other !anner si-nif"in- an a-ree!ent that the possession is
transferred fro! the vendor to the vendee.
%'
) perusal of the deed of absolute sale
sho+s that both the vendor and the vendee represented and +arranted to each other
that each had all the re=uisite po+er and authorit" to enter into the deed of absolute sale
and that the" shall perfor! each of their respective obli-ations under the deed of
absolute in accordance +ith the ter!s thereof.
%&
)s previousl" sho+n, there +as no
actual or constructive deliver" of the thin-s sold. 1hus, petitioner has not perfor!ed its
obli-ation to transfer o+nership and possession of the thin-s sold to respondent.
)s to the last issue, petitioner clai!s that its failure to !a.e actual deliver" +as be"ond
its control. It posits that the refusal of Creative Bines to allo+ the haulin- of the
!achiner" and e=uip!ent +as unforeseen and constituted a fortuitous event.
1he !atter of fortuitous events is -overned b" )rt. %%8; of the Civil Code +hich
provides that e0cept in cases e0pressl" specified b" the la+, or +hen it is other+ise
declared b" stipulation, or +hen the nature of the obli-ation re=uires assu!ption of ris.,
no person shall be responsible for those events +hich could not be foreseen, or +hich
thou-h foreseen, +ere inevitable. 1he ele!ents of a fortuitous event are2 *a, the cause
of the unforeseen and une0pected occurrence, !ust have been independent of hu!an
+illE *b, the event that constituted the caso fortuito !ust have been i!possible to foresee
or, if foreseeable, i!possible to avoidE *c, the occurrence !ust have been such as to
render it i!possible for the debtors to fulfill their obli-ation in a nor!al !anner, andE *d,
the obli-or !ust have been free fro! an" participation in the a--ravation of the resultin-
in/ur" to the creditor.
7$
) fortuitous event !a" either be an act of <od, or natural occurrences such as floods or
t"phoons, or an act of !an such as riots, stri.es or +ars.
7%
Ao+ever, +hen the loss is
found to be partl" the result of a personGs participationU+hether b" active intervention,
ne-lect or failure to actLthe +hole occurrence is hu!ani6ed and re!oved fro! the
rules applicable to a fortuitous event.
77
@e =uote +ith approval the follo+in- findin-s of the Court of )ppeals, to +it2
@e find that Creative BinesG refusal to surrender the propert" to the vendee does not
constitute force !a/eure +hich e0culpates )P1 fro! the pa"!ent of da!a-es. 1his
event cannot be considered unavoidable or unforeseen. )P1 .ne+ for a fact that the
properties to be sold +ere housed in the pre!ises leased b" Creative Bines. It should
have !ade arran-e!ents +ith Creative Bines beforehand for the s!ooth and orderl"
re!oval of the e=uip!ent. 1he principle e!bodied in the act of <od doctrine strictl"
re=uires that the act !ust be one occasioned e0clusivel" b" the violence of nature and
all hu!an a-encies are to be e0cluded fro! creatin- or enterin- into the cause of the
!ischief. @hen the effect, the cause of +hich is to be considered, is found to be in part
the result of the participation of !an, +hether it be fro! active intervention or ne-lect, or
failure to act, the +hole occurrence is thereb" hu!ani6ed, as it +ere, and re!oved fro!
the rules applicable to the acts of <od.
7#
51
Moreover, )rt. %:$; of the Civil Code provides that +here actual deliver" has been
dela"ed throu-h the fault of either the bu"er or seller the -oods are at the ris. of the
part" in fault. 1he ris. of loss or deterioration of the -oods sold does not pass to the
bu"er until there is actual or constructive deliver" thereof. )s previousl" discussed, there
+as no actual or constructive deliver" of the !achiner" and e=uip!ent. 1hus, the ris. of
loss or deterioration of propert" is borne b" petitioner. 1hus, it should be liable for the
da!a-es that !a" arise fro! the dela".)avvp%i)
)ssu!in- ar-uendo that Creative BinesG refusal to allo+ the haulin- of the !achiner"
and e=uip!ent is a fortuitous event, petitioner +ill still be liable for da!a-es. 1his Court
a-rees +ith the appellate courtGs findin-s on the !atter of da!a-es, thus2
)rticle %%8$ of the Civil Code states2 91hose +ho in the perfor!ance of their obli-ations
are -uilt" of fraud, ne-li-ence, or dela" and those +ho in an" !anner contravene the
tenor thereof are liable for da!a-es.9 In contracts and =uasi5contracts, the da!a-es for
+hich the obli-or +ho acted in -ood faith is liable shall be those that are the natural and
probable conse=uences of the breach of the obli-ation, and +hich the parties have
foreseen or could have reasonabl" foreseen at the ti!e the obli-ation +as
constituted.
7;
1he trial court correctl" a+arded actual da!a-es as pleaded and proven
durin- trial.
7:
@AEREORE, the Court )IRMS in toto the Decision of the Court of )ppeals dated
#% )u-ust 7$$;. Cost a-ainst petitioner.
SO ORDERED.